UPDATE: Crude plunges on bearish stocks report
Head of Commodity Strategy
UPDATE: Crude oil and products continue lower following a bearish EIA report. Crude oil stocks jumped by 6.8m barrels due to a 1.3m b/d pick up in net imports.
Support came from continued strong refinery demand which reached a record 18m b/d. Stocks at Cushing rose by 1.6m barrels, the first rise in 13 weeks while production was adjusted higher by 100,000 (rounding) to 10.9m b/d.
In order to understand why crude oil has been left more exposed to an EM slowdown than before, we need to look at demand growth. According to the IEA via Bloomberg, some 50% of global demand growth in 1999 was driven by non-OECD countries. Today this percentage has risen to 87% and it highlights the current risk to demand from key consumers as their currencies continue to weaken against the dollar.
Brent crude is once again testing what looks like key support at $71/barrel.
The combined gross-short in Brent and WTI at 71,000 lots is close to the lowest seen during the past five years. This as the fear of supply disruption up until now have weighed harder than the risk to demand from trade wars and the recent increase in supply.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.