Citigroup Expects Commodities to Rebound
April 7, 2021
The API called crude oil stocks down 2.6 million barrels and the stocks of crude oil at Cushing, Ok were also down 100,000 barrels. Gasoline stocks were up 4.6 million barrels and distillates were up 2.8 million barrels.
For the DOE inventory update today here are the average estimates from the Bloomberg survey. Crude stocks are estimated to be down 1.566 million barrels, gasoline stocks are called down 367,000 barrels and distillates are called up 611,000 barrels.
According to Reuters, OPEC+’s decision to ease their output restrictions from May onwards is effectively a bet that demand for crude oil will improve at the same pace as production returns. However, it will be difficult to get that balance correct, especially in the wake of such a large disruption to the global oil market as the coronavirus pandemic.
According to analysts at Citigroup, commodities prices should rebound strongly through the rest of 2021. It said commodities “seem certain to have a banner year” in 2021, with demand exceeding forecast global GDP growth of 5.5% for most markets. It however stated that the gains may not herald a start of a commodities super cycle, which requires 3 to 5 years of across-the-board increases, given the absence of factors including a weak dollar and massive oil-supply disruptions. Citi is bullish on ICE Brent due to projected inventory draws, helped by maintenance in North Sea and demand recovery west of Suez.
Oil prices rebounded yesterday after the prior days’ selloff on the back of a brighter outlook for economic growth in the US and China. The IMF is forecasting stronger global growth than originally predicted (now 6%) and the US government is anticipating stronger gasoline demand this summer as Americans get back on the road.
Estimates for today’s propane inventory report are estimates for a build of 6,000 barrels. The five year average for this reporting week is an average 211,000 build.