JP Morgan Raises Chinese Crude Demand Forecast
January 25, 2023
The API called crude oil inventories up 3.4 million barrels. Gasoline inventories up 620,000 barrels and distillates down 1.9 million barrels.
The average estimate for today’s DOE inventory update from the Bloomberg survey are for crude stocks to be up 704,000, gasoline up 1.304 million barrels and distillates down 1.232 million.
The average estimate for today’s propane inventory update is for stocks to be down 2.3 million barrels.
JP Morgan raised its forecast for Chinese crude demand to 770,000 bpd but maintained its projection for a 2023 price average of $90 per barrel for Brent crude oil. It sees prices ending the year at $94 per barrel. JP Morgan analysts said, “Absent any major geopolitical events, it would be difficult for oil prices to breach $100 in 2023 as there should be more supply than demand this year.”
Energy markets moved lower in yesterday’s trading as they were given some fresh weak economic news and that made traders take their eyes off all the bullishness surrounding China lately that had pushed the market up over the last couple of weeks. S&P Global reported that US business activity contracted in January for the seventh consecutive month. Also, spurring concerns of a US recession, the Conference Board Leading Economic Index for the US in December fell by 1% to 110.5 and by 4.2% over the six-month period between June and December 2022. Historically readings this low are accompanied by recessions.
Diesel imports into Europe from Asia, the Middle East and Russia are set to reach 7.2 million tons in January. Exports from Russia are set to reach 3.47 million tons in January, similar to December’s record, as traders rush to fill tanks with diesel ahead of a February 5th European ban on imports of Russian fuel. Shipments from Asia and the Middle East are expected to reach 3.2 million tons so far in January, slightly below December 3.4 million tons.