Lots of interesting comments on both sides for oil demand and supply. It was a fugly EIA report yesterday after spectacular draws two weeks ago. Lots of murky data. Who do you trust?
The biggest impact in my opinion is the financial cost to carry inventories - it went up so much that it moved barrels onto the market. Storage fees are expensive enough; when you had dramatically higher interest rates you compound the cost to hold physical barrels.
Nuttall points out that an average year would see an 80 million barrel build in Q2 versus a 30 ish million barrel build this year, which includes a 20 million barrel SPR release. If true thst is pretty bullish. DUCs back to near term lows and a 5% reduction in the frac fleet.
Chinese demand seems pretty strong, Indian demand is off the charts strong. Russian and Saudi exports are showing declines now. Airline travel numbers are stupidly high. Try booking a flight on short notice and see what they want for airfare.
EIA revised their demand forecast up every month but this one. A recession has been forecast for more than a year now. When have we seen that before?
American inventories are also a bit muky because of all the liquids stripped out of shale gas. Most of the world still gets a lot of propane and butane from refining oil. EIA keeps screwing those numbers up when calculating inventories.
Murky as hell but demand has been on the higher side of expectations most of the year. WCS spreads are pretty tight for now. Too bad the dollar is over 76 pennies.
My opinion is that demand had been stable with an upward bias and that there is a little more supply than expected. Like an extra 150k boepd out of the US, 500k more out of Russia for Q1 and part of Q2, slightly faster growth from Guyana etc. small incremental barrels here and there. Probably Iran being the biggest around 500k or so. Venezuela will likely be the next big shoe to drop on the supply side. But when?
I expect growth around 1.5 million bpd this year and next. Regardless of recession risk.
My gut instinct is that the biggest risk is an American based debt/banking/financial crisis. They do have the abilty to reduce rates dramatically again should that occur though. The rate run up has given them the room to reduce now.
I know TLDR....