By: Harry Altham, Energy Analyst, Market Analysis EMEA & Asia
Brent is back above $75/bbl after U.S. crude stocks fell by 4.3M bbl last week, far exceeding Reuters analysts’ expectations of a 0.65M bbl drop. That said, stocks at Cushing rose by 1.2M bbl (5%), as the regional hub raises total stocks above 30M bbl for the first time since August. In October, they dropped to a nine-year low of 21M bbl; inventories beneath 20M bbl are considered close to operational minimum (less than 20% of the 98M bbl storage capacity) due to the viscous composition of the product, making extraction increasingly difficult.
The past 24 hours have been dominated by ‘energy institution politics’; both OPEC and the IEA issued weighty statements that have implications for markets (and possibly bilateral relations). Yesterday, OPEC+ once again expressed its view that speculators were ‘exaggerating’ demand-side weakness in the oil fundamentals ahead of 2024. It labelled market weakness a product of fund activity in futures markets, while it reaffirmed its ‘cautious optimism’ for the fundamentals ahead of 2024. To that end, OPEC+ kept its forecast for world demand growth at 2.46M bbd.
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