Listen to the latest market mood for the BCOUSD.
The demand case for oil has weakened further after yesterday’s post.
The latest report from the International Energy Agency out yesterday showed a 200K bpd cut for 2020 crude oil demand forecast. They maintained their crude oil demand forecast for 2021 unchanged at 91.7mln bpd. This adds to the bearish picture for oil as yesterday’s monthly OPEC oil report yesterday showed that oil demand growth for OPEC crude was revised down by 700K bpd to 22.6 mln bpd for 2020 and down even further for 2021 by 1.1mln bpd to 28.2mln bpd.
Oil prices are likely to remain under pressure and although there has been a bumper number of car sales recently there is not the gasoline demand to accompany it. According to CIBC, the weekly EIA gasoline supplied data, a proxy for consumer demand, continues to hover around ~90% of the five-year demand average for the last nine weeks.
Despite oil rising today on hurricane’s Sally approach into the Gulf of Mexico and a surprise draw in the private oil inventory data, the weaker outlook for oil means that any rallies higher in Brent crude should find sellers if market conditions remain unchanged. Expect Brent crude sellers on pullbacks to 50% Fib.
- A vaccine/successful treatment for COVID-19
- A faster return to global oil demand