ICE Brent closed slightly lower yesterday despite US inflation rises less than expected, while the IEA also revised upwards its oil demand forecasts for this year and next in its latest oil market report. The IEA revised up its 2023 oil demand growth forecast by around 100 million barrels/day, to 2.4 million barrels/day. This increase was the result of Chinese demand reaching record levels, while US demand has also been stronger than the agency expected. Demand growth forecasts for 2024 were increased from 900 Mbbls/d to 930 Mbbls/d. Supply has also been a strong performer, with the United States, Brazil and Guyana driving supply growth this year. The IEA forecasts a smaller deficit than originally expected in 4Q23 of around 900 Mbbls/d and also forecasts the market will return to surplus early next year. Our balance sheet also shows a surplus in 1Q24 before the market returns to a deficit for most of 2024. However, this surplus will also depend on whether or not the Saudis renew their additional voluntary supply cut of 1 million barrels/d.
Overnight API numbers were fairly neutral. U.S. crude oil inventories reportedly rose by 1.3 million barrels last week, while crude oil inventories at Cushing grew by 1.1 million barrels. On the product side, gasoline inventories increased marginally by 195 million barrels and distillate inventories decreased by 1 million barrels.
In the gas market, Chevron has resumed operations at the Tamar gas field in Israel. The Israeli government ordered the camp closed for security reasons following the Hamas attack in early October. The restart of production at the field means that gas flows to Egypt will also increase, which will also ease concerns for Europe, as a tighter Egyptian gas market would mean limited LNG exports from Egypt to Europe during the winter.
In today’s schedule, in addition to the usual weekly EIA inventory data for the US, China will also release retail sales and industrial production figures for October, which will include crude oil and refining production.