ANZ are expecting expect further drawdowns in global inventories ahead:
The outlook for road transportation fuels is improving strongly ahead of the northern hemisphere’s summer driving season.
- High vaccination rates have seen restrictions ease and mobility increase in the US and Europe.
- In fact, gasoline demand has now exceeded 2019 levels in many areas.
- This may be partly offset by weakness in Asia,which is suffering a wave of COVID-19.
- This should offset concerns of additional Iranian oil hitting the market
We see demand outstripping supply in the order of 650kb/d and 950kb/d in Q3 and Q4 respectively. This includes 0.5mb/d increase in Iranian output.
OPEC is likely to take a cautious approach at (its) meeting.
- We expect the scheduled increase of 840kb/d in July to be ratified. However,the group is unlikely to provide any guidance on output in August
- Another 1mb/d of oil would certainly slow the current drain on inventories. This will ultimately limit the price rise
We maintain our year-end forecast of $75/bbl for Brent crude.