Bloomberg – Oil is going through a difficult year, Stocks have been shaken by jitters over China’s slowdown, OPEC+ supply cuts and the fallout from the Federal Reserve’s tightening campaign. The tensions confused many traders and prices fell, then recovered. Now, what comes next is the topic of debate in Singapore.
Producers, hedge funds, analysts and traders will gather in this Southeast Asian city for the Asia-Pacific Oil Conference, organized by the International Petroleum Organization. Standard & Poor’s Global Commodity Insights. The largest sector meeting in the region, which begins on Monday, is a must-see on the calendar. Because it provides a real test of the current state of the market and clues about the forecast.
Speakers include Russell Hardie, CEO of Vitol Group, Gary Ross, Director of Black Gold Investors LLC, and Ben Lowcock, Co-Head of Oil Operations at Trafigura Group. Although all of them will focus the audience’s attention during the day, Many of the events favored by attendees will be held after business hours; For invitation-only cocktail parties and elegant events hosted in hotels, colonial-era clubs, rooftop bars and even a golf course.
Fluctuations in crude oil prices throughout 2023 caused Brent crude, the global reference, to reach its lowest level since 2021 in June, at just over $70 per barrel. The collapse, which caught overly bullish banks like Goldman Sachs Group Inc by surprise, This is partly because flows from Russia have proven more resilient than expected despite sanctions and price caps imposed in the wake of the invasion of Ukraine. Then Saudi Arabia-led supply cuts paved the way for a recovery, with Brent crude now approaching $89.
“I find it interesting that the OPEC+ cuts, Which apparently started as a measure to defend the US$70 floor for Brent crude, and is now working to keep it well above US$80.said Vandana Hari, founder of Vanda Insights, who will speak at the conference. What is the long-term plan for the coalition? Aim for $80 to $90?”
Additional reductions are planned. Russia announced last week that it had agreed with its partners in OPEC+ Further reductions in exports, details will be published in the coming days. Meanwhile, Saudi Arabia is expected to extend its 1 million barrel cut through October, according to a survey by the American Petroleum Institute. Bloomberg.
“I’m sure Saudi Arabia will start tapering the additional 1 million bpd supply cut at some point,” said Warren Patterson, head of commodity strategy at ING Groep NV, anticipating a return to production in the fourth quarter. “Basically, the market can easily absorb the yield on these barrels.”
Reflecting these expectations, the International Energy Agency said in its latest report that global demand for oil has reached a record level amid strong consumption, a trend that could boost prices. Global consumption averaged 103 million barrels per day in June for the first time and may continue to increase, according to the agency.
There is no doubt that there are many signs that the global market is becoming tense. Among them are US commercial inventories. It has fallen by about 60 million barrels since its peak in mid-March. Stocks are now at the lowest level since the end of 2022. On the other hand, Brent and WTI futures are trading in a sustained decline, which is a bullish pattern.
However, demand remains a concern, especially the outlook for China, the main importer. Although crude oil flows so far this year have far exceeded last year’s pace, most have been stored and some processed fuel has been shipped abroad amid domestic weakness. In addition, the country has been recording weak economic data for months, with its recovery faltering after the missile crisis.
Flows from China may be higher, but “This reflects a “catch-up” of inventory build-up as the economy adjusts again as travel returns to normal“It is too early to declare that the recent rise in import volumes reflects industrial optimism,” said Vishnu Varathan, head of Asia economics and strategy at Mizuho Bank Limited.
-With assistance from Sharon Chu.
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