Oil Supply Shock Worsens amid Plunging Petroleum Inventories
IEA: Tight Gas Markets Will Last Through 2030 Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.
Global oil and fuel inventories are falling at record speed as the Middle East supply shock overwhelms existing buffers.
Global crude oil and fuel inventories are crashing at a record speed as the supply shock from the Middle East is too big to absorb without stock depletion.
While the futures markets trade on sentiment and hopes that a U.S.-Iran deal could soon lead to the reopening of the Strait of Hormuz, the actual physical disruption is enormous.
It has already erased the oversupply that the market faced at the start of the Iran war.
The initial buffers are gone, and now commercial inventories are depleting so fast that even an imminent reopening of the Strait of Hormuz will not reverse the stock draw for at least two months after flows from the Middle East normalize.
Analysts and executives say the global inventory situation will get worse before it gets better, as the market will need months before a potential relief arrives from an operational Strait of Hormuz.
“Drawdowns across onshore and commodities on water, along with key hubs such as ARA, the US, and Singapore, are helping bridge supply gaps,” Sumit Ritolia at Kpler wrote in ananalysislast week.
“However, inventory support remains finite and cannot sustainably offset prolonged disruptions,” the analyst noted.
Goldman Sachs has estimated that plunging global oil inventories are approachingan eight-year low, with the rate of depletion so fast that it exposes the market to further shocks.
While global oil stocks are “unlikely to hit minimum operational levels this summer, the speed of depletion and supply losses in some regions and products is concerning,” analysts at Goldman Sachs wrote in a note earlier this week.
Total oil stocks globally have now dropped to about 101 days of expected demand.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | ▲ +0.34% |
| WTI Crude | $96.90/bbl | ▲ +0.21% |
| EN590 Diesel | $846/MT | ▲ +0.18% |
| Jet Fuel A-1 | $1090/MT | ▲ +0.55% |
| Mazut M100 | $450/MT | ▼ -0.15% |
| Bitumen 60/70 | $470/MT | ▲ +0.08% |
| Sulphur Gran 99.5% | $470/MT | ▼ -0.44% |
| Urea 46% Gran | $650/MT | ▲ +1.12% |
| NPK 16-16-16 | $460/MT | ▼ -0.28% |
| Nat Gas TTF | $15.42/MMBtu | ▲ +0.92% |
Price alerts · Industry news
Comments
Post a Comment