Oil Market Report - June 2024

12June2024 Worldoildemandgrowthcontinuestoslow,with2024gainsnowseenat960kb/d,100kb/dbelowlastmonth’sforecast.WeakOECDdeliveriespushedglobaldemandintoanarrowy-o-ycontractioninMarch.Subpargrowthof1mb/din2025isheldbackbyamutedeconomyandacceleratingcleanenergytechnologydeployment. Globaloilsupplyroseby520kb/dinMayto102.5mb/d,asBrazilianethanoloutputsurgedseasonally.Fortheyearasawhole,productionincreasesby690kb/d,ledbynon-OPEC+gainsof1.4mb/d.OPEC+supplyfallsby740kb/difvoluntarycutsaremaintained.In2025,globalsupplyisforecasttoriseby1.8mb/d,asnon-OPEC+outputincreasesby1.5mb/d. RefiningmarginsinAsiaretreatedtothree-yearlowsinMayandarenowclosetoruncutterritory.USGulfCoastrefiningprofitabilityslippedbacktosix-monthlowsbutremainsaboveEuropeanlevels.2024and2025cruderunsforecastsare100kb/dhigherthanlastmonth’sReport,at83.5mb/dand84.2mb/d,respectively.StrongerOECD2Q24throughputsoutpacedstill-weakChineseruns,whichslumpedtoCovid-eralowsinApril. Globalobservedoilinventoriesbuiltby19.3mbinApril.Onlandstockssurgedby 83.5mbaftereight-monthsofdraws,whileoilonwaterplungedby64.2mbfollowing 112.6mbofincreasesintheprevioustwomonths.OECDindustrystocksroseby 32.1mb,itsfirstmonthlyincreasesinceOctober.Preliminarydatasuggestafurther 48.2mbbuildinMay. Brentcrudefuturesfellby$6/bblinMayasinventorybuildspointedtoacomfortablysuppliedAtlanticBasinmarket.Pricesslidanother$4/bblafterthe2JuneOPEC+meeting,withtraderstakingabearishviewofthegradualunwindingoflastyear’svoluntaryoutputcuts.Oil’spricestructureweakenedinparallel,withfront-monthspreadsbrieflyslippingintocontango.Atthetimeofwriting,Brentwastradingataround $81.50/bbl. IEA.Allrightsreserved. Tablesofcontents Adjustinglower3 Demand4 Supply7 Refining8 Stocks12 Prices15 Freight17 Russiantradeandrevenus18 Tables19 NotetoSubscribers: Thismonth’sReportisabbreviated,aswearesimultaneouslypublishingourannualmedium-termoutlook,Oil2024–AnalysisandForecastto2030.Thefollowingoverviewfocusesontheshort-termforecastthatextendsto2025. TheusualOMRformat,withwrittenanalysis,willresumeforthe11Julyedition. Adjustinglower BrentcrudefuturescontinuedtoslideinMayandearlyJune,asflaggingoildemandgrowthandinventorybuildspointedtoacomfortablysuppliedmarket.Brentfuturesfellby$6/bblinMay,beforetumblingfurtherinearlyJuneaftertheOPEC+allianceannouncedplanstograduallyunwindlastyear’sextravoluntaryoutputcutsstartingin4Q24.Traders’initialresponsewasoverwhelminglybearish,withpricesfallingtoalowofaround$77.50/bbl,butOPEC+officialsquicklyreiteratedthatarollbackofoutputreductionswillbecontingentonmarketconditions.Atthetimeofwriting,Brenthadreboundedto$81.50/bbl–stillabout$11/bblbelowearlyApril’s2024highs. InMay,globalobservedonshoreoilinventoriesswelledforasecondconsecutivemonthaslacklustredemandmetwithrobustoilsupply.Preliminary,albeitincomplete,datashowoilstocksrisingby48.2mblastmonth,ledbytheUnitedStatesandChina.Theincreasecomesontopofa19.3mbbuildinApril,whenon-landstockssurgedby83.5mbaftereightmonthsofdraws.Oilonwater mb/dDemand/SupplyBalance 110 105 100 95 1Q233Q231Q243Q241Q253Q25 mb/d 4 2 0 -2 plungedby64.2mb,however,partlyreversingthe112.6mbincreaseseenovertheprevioustwomonths.OECD StockCh.&Misc(RHS)DemandSupply Note:AssumesOPEC+curbsremaininplace. IEA.Allrightsreserved. industryinventoriesroseinbyApril32.1mb,largelyinlinewithseasonaltrends,butremained 94.7mbbelowtheirfive-yearaverage. Thesestockbuildscomeamidcontinuedoildemandslowdownsinkeymarkets,mostnotablytheOECD.USandEuropeandataundershotexpectationsasexceptionalgasoilweaknessalignedwithchallengingindustrialconditions.OverallannualgainsinMarchof650kb/dfornon-OECDcountriesfailedtooffsetthe815kb/dcontractionintheOECD,resultinginanoveralldeclineindemandof165kb/dyear-on-year.PreliminarydataforAprilandMaypointtofurtherweakness,withChinesedemandgrowthslumpingfrom800kb/donaveragein1Q24toonly95kb/dinApril.Asaresult,wehaveadjustedlowerourexpectationsfor2024globaloildemandgrowthbyafurther100kb/dto960kb/d.Oil’ssubduedoutlookisexpectedtocarryforwardinto2025,withamodestincreaseof1mb/dreflectinglacklustreeconomicgrowth,anexpandingEVfleetandvehicleefficiencygains. ThelatestboutofdemandweaknessshowsupinrefiningmarginsinAsiaandtheUnitedStates,whichretreatedtothree-yearlowsinMay.Singaporemarginsarecloseto,ifnotalreadyin,runcutterritory,withgasolinecracksparticularlyweak.Bycontrast,Europeishangingontorecentstrengthmoreeffectively,asjet/kerosenecracksimproved.Meanwhile,ChineserefineryrunsslumpedtoCovid-eralevelsinAprilandan8.7%y-o-ydeclineinChinesecrudeoilimportsinMaysuggestsubduedrunsagainlastmonth. Asforsupply,OPEC+haslaidoutaroadmapforunwindingextravoluntarysupplyreductionsofupto2.2mb/dfrom4Q24through3Q25.Giventhebloc’sassurancesthattheproductionincreasecanbepausedorreversedsubjecttomarketconditions,wewilladjustourOPEC+supplynumberswhensuchadecisionisconfirmed.Onthatbasis,globaloilsupplylookssettoriseby690kb/donaveragethisyear,ledbya1.4mb/dincreasefromnon-OPEC+countries.Nextyearcouldseegainsof 1.8mb/dintotal,withnon-OPEC+up1.5mb/dandOPEC+320kb/dhigher.Withoildemandexpecte