HSBC Expects Record Chinese Oil Demand to Continue to Support Prices
September 25, 2023
The Baker Hughes Rig report had oil rigs down 8 to a total of 507 rigs. This week’s report reverses the last two weeks of gains. JP Morgan research is calling for 14 rigs to be added by the end of the year. US oil rigs have fallen by 114 rigs so far in 2023.
WTI Prices closed slightly higher on Friday, but Brent and refined fuel products prices fell. WTI crude oil prices were supported by EIA reporting on Wednesday a larger than expected drop in total US crude oil stocks and a very large drop in Cushing, Ok stock where the WTI contract is priced. The US dollar index rose to a 6-momth high which put downward pressure on Brent prices.
HSBC Global Research raised its Brent price forecast to $90 per barrel in the fourth quarter, $84 per barrel for fiscal year 2023 and $82.50 per barrel for 2024. It said record Chinese oil demand should continue to support prices in the near term.
Russia said they would allow some low-quality diesel to be exported. This put some selling pressure on prices early, but crude oil and RB futures have firmed up and are trading positive, but ULSD is still down a couple cents.
Crude oil inventories were down 2.1 million barrels last week and are now 3% below the five-year average. Gasoline inventories were down by 800,000 barrels seek over week and are now 4% below the five-year average. Distillates decrease by 2.9-million-barrels week over week and are now 14% below the five-year average. Propane inventories increased by 1.6-million-barrels week over week and are now 20% above the five-year average.