The eight OPEC + nations which contributed to voluntary production cuts should meet on Friday to discuss the production strategy for July. Standard Standes of Standard Chartered predicted that we are likely to see more of the same thing, the group adding 411 others From a thousand barrels per day to July and a cumulative relaxation now taking place at 1.4 MB / d. Interestingly, analysts reported that the increase in targets did not resolve the large expected increases in OPEC +production, partly because the increase simply reduces the degree of exceeding targets above overproduce and partly because of the opposite winds in certain countries. Stanchart estimates that OPEC + Total crude production in March succeeded at 40.99 MB / D, the last month before the start of relaxation, it takes place at 41.90 Mb / d in July, assuming that the increase of 411 KB / J takes place. In other words, the group will add effectively only 905 kb / d at the daily exit despite the relaxation of 1.4 MB / d in the targets. More importantly, Stanchart has planned that the world markets remain largely balanced in the second and third quarters of the current year, even in the event that the last slice of voluntary cuts is finally unrolled at the end of the Q3.
Stanchart expects OPEC + (excessive demand measure) of crude oil and inventories with an average of 42.1 MB / d in the third quarter, 1.9 MB / D higher than at first quarter and higher than the average production of TW OPEC + crude oil of 42.1 MB. Analysts also planned that global demand will increase by 1.17 MB / Dy / y in 2025. While some analysts have reduced demand growth forecasts from 2025 to less than 0.4 MB / D, Stanchart says they still have to see anything in the flow of data on global demand or in economic projections to justify such low projections. On a more downward note, Stanchart warned that, even so unlikely, the eight OPEC + producers could decide to accelerate the relaxation clip to more than 411 ko / d if the worst overproduce (Kazakhstan and Iraq) fail production as previously agreed. However, it is more likely that the group will stick to its current trajectory since the feeling of the market has not been too attenuated by the May and June increases.
Related: Chinese oil refiners increase exports as domestic demand disappoints
However, Stanchart notes that the lowering feeling still reigns the oil markets, with accounting or more important goals than normal in a wide range of raw categories and products being the last negative catalyst. According to the Latest weekly EIA dataRaw oil stocks increased from 1.33 MB / N to 443.16 m, reducing the deficit to the five -year average From 26.31 MB. Fuel stocks have also shown a counter-season construction, adding 0.82 MB to 225.52 Mb. The number of requests was also soft, with an implicit petrol request at 150 kb / d lower P / P to 8.64 MB / d, taking the decline in y / y for May at 7.2%. The implicit demand for jet fuel and distillates was also low, with a drop in Y / y of 7.4% and 4.0%, respectively.
Oil prices are considerably lower than one year, it is not surprising that oil producers are less eager to drill. According to the latest Baker-Hughes investigationThe number of US oil platforms has dropped eight p / p to 42 months lower by 465, good for 32 platforms less than 12 months earlier. The Permian basin has been the hardest, signaling a fall of 25 platforms so far during the current year and AY / Y 33 platforms. On the other hand, the main source of growth in drilling in the past year was Granite Wash, with a number of platforms increasing by 12 years. Wash granite is a set of tight sands rich in liquids covering certain parts of Texas Panhandle and Western Oklahoma.
And now Wall Street says that the decline of permien is optimistic for oil markets. According to Goldman Sachs, the continuous slowdown in drilling activity in the Permian basin is likely to support at crude oil prices. GS notes that the total number of American rigs and a fracturing propagation dropped by 14% and 22% compared to a year ago, respectively, reporting a drop in narrow oil production. The drop is quite alarming since the Permian basin has the lowest costs for shale oil thanks to the use of cheaper and more effective production techniques such as horizontal drilling. Goldman claims that other regions of American shale with higher costs of profitability threshold are faced with even more complaints in the midst of persistent oil prices.
By Alex Kimani for OilPrice.com
More top readings of OilPrice.com
