- Oil is trading above $80, following IEA report
- Following yesterday's EIA inventory report, US crude storage is about 3% below the five-year average
- IEA says oil markets to be undersupplied on OPEC+ cuts (BBG)
- Global oil markets could be in a supply deficit in 2024 instead of a surplus, which the IEA previously forecasted, if OPEC continues to reduce supply through the second half of the year
- The IEA said, “The changed assumptions shift our implied balance into a slight deficit rather than the hefty build in last month’s report”
- The agency also increased its forecast for global demand growth by 110 MBbl/d to 1.3 MMBbl/d due to a stronger US outlook and higher demand for ship fuel as vessels take longer routes to avoid the Red Sea
- On June 1, OPEC will decide whether to extend the supply cuts through the rest of the year
- Chinese refiners cut output (BBG)
- Independent refineries in China have reduced operating rates to a two-year low as demand for products has fallen
- When adjusting for the pandemic and the Shanghai lockdown, refinery run rates are the weakest since 2016
- China’s independent refineries are more sensitive to market prices than the larger state-run refineries and will typically throttle output quicker
- The Chinese manufacturing sector has been contracting since September, leading to a reduction in diesel demand
- Independent refineries in China have reduced operating rates to a two-year low as demand for products has fallen
