Crude oil prices reversed their decline today after the Energy Information Administration reported an oil inventory draw of 1.6 million barrels for the week to September 18. This compares with a draw of 4.4 million barrels for the previous week.

The report came a day after the American Petroleum Institute propped prices up temporarily by estimating a sizeable decline in gasoline stocks, coupled with a modest build in crude oil stocks. Analysts, on the other hand, had expected the EIA this week to report an inventory draw of 2.325 million barrels.

In gasoline, the EIA estimated an inventory draw of 4 million barrels for the week to September 18, compared with a decline of 400,000 barrels for the previous week. This also helped prices up.

Gasoline production averaged 9.3 million bpd last week, up on a week earlier, when gasoline output averaged just 8.8 million bpd.

In distillate fuels, which are giving refiners a headache as demand for them remains a lot more subdued than demand for gasoline, the EIA reported a draw in stocks of 3.4 million barrels. This compares to a build of 3.5 million barrels estimated for the previous week amid still severely limited air travel.

Distillate fuel production last week averaged 4.5 million bpd, compared with 4.4 million bpd a week earlier.

Oil prices were still down at the time of writing, with Brent crude trading at $41.69 a barrel and West Texas Intermediate trading at $39.70 a barrel. The decline is hardly a surprise: it came amid deepening worry about the future state of oil demand as economic reports from different parts of the world suggested that any recovery would be slow. It also came soon after the news broke that Libya was reopening some of its oil export terminals and boosting production.

OilX reported that plans were to raise production to 260,000 bpd, from currently below 100,000 bpd. In a precarious price environment, this production boost was bound to pressure prices despite OPEC+’s stated success with production cuts.

By Irina Slav for Oilprice.com (View Full Article Here)

Goldman Sachs is bullish on oil, expecting the market to be in a deficit of around 3 million barrels per day (bpd) by the fourth quarter and Brent Crude prices to recover to $49 a barrel by the end of this year, from $43 early on Friday.

According to a new report from Goldman analysts, carried by Reuters, the recent floating storage of oil is more “transient inventory allocation dynamics” instead of a signal of a new glut.

“We estimate that the oil market remains in deficit with speculative positioning now at too low levels,” Goldman Sachs said, keeping its Brent Crude target at $49 by end-2020 and $65 by the third quarter of 2021.

Earlier this month, Goldman Sachs forecast Brent Crude to reach $65 a barrel in the third quarter of 2021, although it could end next year lower, at $58 a barrel.

Goldman Sachs also expects WTI Crude to rally to $55.88 a barrel by the third quarter of 2021, up from $51.38 a barrel in earlier forecasts.

“There is a growing likelihood that vaccines will become widely available starting next spring, helping support global growth and oil demand, especially jet,” the Goldman analysts said earlier this month, and are keeping that view.

Vitol Group, the world’s largest independent oil trader, also expects global oil inventories to continue drawing down for the rest of the year, unlike its rivals and many analysts who see a growing glut on the market.

The world’s stockpiles of oil have diminished by around 300 million barrels since peaking at 1.2 billion barrels early this summer, and are expected to decline by another 250 million-300 million barrels between September and December, Vitol’s chief executive officer Russell Hardy told Bloomberg in an interview earlier this week.

Vitol looks more bullish on oil’s short-term prospects than another major commodity trader, Trafigura, which expects a “supply-heavy” market through the end of the year, with inventories building by the end of 2020 as demand recovery stalls.

By Tsvetana Paraskova for Oilprice.com (View Full Article Here)

Oil prices are set to rise to $60 a barrel by the end of next year as the oversupply will have been drawn down by then, according to Citigroup, which is bullish on oil.

Growing economies will lead to global oil demand returning to the pre-coronavirus levels in late 2021, Citi’s global head of commodities research Ed Morse told Bloomberg in an interview.

According to Citigroup, Brent Crude prices – which slumped below $40 a barrel last week amid growing concerns about demand – are set to average around $55 per barrel next year and recover to $60 a barrel by the end of 2021. WTI Crude – at $37 early on Monday – is expected to jump to $58 per barrel by the end of next year.

Another major bank, Goldman Sachs, also sees prices hitting $60 a barrel and even more next year.

Goldman Sachs expects Brent Crude to reach $65 a barrel in the third quarter of 2021, although it could end the year lower, at $58 a barrel.

Goldman Sachs also expected West Texas Intermediate to rally to $55.88 a barrel by the third quarter of next year, up from $51.38 a barrel in earlier forecasts, Business Insider reports.

“There is a growing likelihood that vaccines will become widely available starting next spring, helping support global growth and oil demand, especially jet,” Goldman’s analysts said.

Investment banks are more bullish about next year, but oil traders are bearish about the short term. One of the top independent traders, Trafigura, expects a “supply-heavy” market through the end of the year, with inventories building by the end of 2020 as demand recovery stalls.

The market will get worse before it gets better, Ben Luckock, Co-Head of Oil Trading at Trafigura, said on a conference on Monday, as carried by Bloomberg. The oversupply on the market is reaching the point where chartering tankers for floating storage becomes profitable, according to Luckock.

Last week, reports emerged that the world’s top oil traders have been chartering dozens of supertankers for potentially storing oil at sea amid signs that demand recovery has stalled.

By Tsvetana Paraskova for Oilprice.com (View full article here)

Goldman Sachs expects Brent crude to reach $65 a barrel in the third quarter of 2021, although it could end the year lower, at $58 a barrel, according to Goldman Sachs analysts.

In a note, they also said they expected West Texas Intermediate to rally to $55.88 a barrel by the third quarter of next year, up from $51.38 a barrel in earlier forecasts, Business Insider reports.

“There is a growing likelihood that vaccines will become widely available starting next spring, helping support global growth and oil demand, especially jet,” the Goldman analysts said.

“Key to the resilience of spot prices, despite stalling inventory draws this summer, has been the steady rally in long-dated prices,” they added.

Earlier this year, the investment bank’s head of commodities Jeffrey Currie said that the short-term prospects of oil remained weak, but in 2021, prices would start to improve more markedly. He noted in July that if prices increased quickly, they would interfere with the market rebalancing by bringing more shale production back online.

Separately, Goldman analysts said back in July that demand for oil would likely recover to pre-crisis levels by 2022, spurred by a return to work for millions, a shift towards more private transport, and government support in the form of infrastructure spending.

In their latest note, the investment bank’s analysts said they expected oil demand to improve by 3.7 million bpd between January and August next year, while supply remains capped thanks to OPEC+’ continuing production cuts and a modest increase in non-OPEC supply.

Oil started this week with a gain, rising to the highest in five months on the back of positive economic news from China, a weak greenback, and plans by the UAE’s state oil company to reduce crude oil supplies by as much as 30 percent in October.

By Irina Slav for Oilprice.com (View Full Article Here)