A snippet from ANZ’s outlook for oil.
- The Energy Information Agency said that oil demand in the US will grow at just under 1% in 2023 due to a forecast slump in diesel demand. The distillate fuel is being impacted by tighter monetary policies in the US as the Fed looks to rein in inflation.
- This is being exacerbated by a US consumer shift to spending on services rather than manufactured goods. The EIA also upgraded its forecast for US supply in its Short Term Energy Outlook.
- This took the gloss of Saudi Arabia’s surprise production cut. The move will see output fall by an additional 1mb/d in July. Saudi Aramco move to raise official selling prices in Asia also failed to convince traders that global demand remains robust.
- We still see the risks skewed to a rally in prices in H2 2023 as the market tightens significantly following the production cutbacks.
ANZ conclude:
- Nevertheless, signs of tightness in the physical market will have to emerge before this move eventuates.