In its June issue Oil Market Monthly Report, the International Energy Agency (IEA) projects a continued slowdown in world oil demand growth, with 2024 gains now seen at 960,000 b/d, 100,000 b/d less than last month's forecast.
According to IEA, weak OECD deliveries caused global demand to experience a slight year-on-year (y-o-y) contraction in March. The modest growth of 1 million b/d in 2025 is constrained by a sluggish economy and the rapid deployment of clean energy technologies.
Refining margins in Asia retreated to 3-year lows in May and are now close to run cut territory. US Gulf Coast refining profitability slipped back to 6-month lows but remains above European levels. Crude runs forecasts for 2024 and 2025 are 100,000 b/d higher than last month’s report, at 83.5 million b/d and 84.2 million b/d, respectively. Stronger OECD second-quarter throughputs outpaced still-weak Chinese runs, which slumped to Covid-era lows in April.
Global observed oil inventories built by 19.3 million bbl in April. On land stocks surged by 83.5 million bbl after 8-months of draws, while oil on water plunged by 64.2 million bbl following 112.6 million bbl of increases in the previous 2 months. OECD industry stocks rose by 32.1 million bbl, its first monthly increase since October. Preliminary data suggest a further 48.2 million bbl build in May.
Brent crude futures fell by $6/bbl in May as inventory builds pointed to a comfortably supplied Atlantic Basin market. Prices slid another $4/bbl after the 2 June OPEC+ meeting, with traders taking a bearish view of the gradual unwinding of last year’s voluntary output cuts. Oil’s price structure weakened in parallel, with front-month spreads briefly slipping into contango.
