Malcy's BlogInteresting comments yesterday re oil demand/supply:
Oil price
Looking at the tone rather than the specific numbers from the EIA in the last couple of days one could be forgiven for thinking that oil really can see the light at the end of the tunnel. ‘Staying on course’ towards the balance they see later this year and being likely to ‘increase demand forecasts’ due to booming gasoline demand in India is positive and 1H 2016 demand being 200/- b/d higher than forecast at +1.4m b/d is the beginnings of evidence. My number of a natural build of +1.6m b/d may be about right in the end. But with the EIA saying that supply and demand is coming more into balance by the end of this year, what happens when you add, or rather take away the $500bn worth of worldwide investment that the majors have withdrawn. These projects will not be able to be brought back at the click of fingers and some are lost forever. The EIA is right to look at gasoline demand, it is growing in India and China and the US is edging towards consumption of 9.65m b/d of gasoline, above my recent call of 9.5m b/d.
Now obviously the oil market isnt suddenly better, the vampire squids still think that storage tanks will overflow and they are certainly high but the recent supply outages have by any means been as responsible as anything else for avoiding the return to sub $30 oil. Indeed with as much as 1m b/d of Canadian oil still off the market, and Nigeria overnight adding to the shortfall, the 2.9m b/d outage figure for the end of April estimated by the EIA only on Wednesday now looks too low.