Manufacturing Demand Slows Across the Globe
August 2, 2022
JP Morgan said its Brent crude oil price forecast continues to call for a stabilization in price towards the low $100s in the second half of 2022 and the high 90s in 2023. It said “our oil strategists’ flag that the risk of a recession is not yet priced into oil markets, and that risk is growing. “
According to the Department of Energy US crude oil stocks in the SPR fell by 4.6 million barrels in the week ending July 29th. Stocks in the SPR fell to 469.9 million barrels, the lowest level since May 1985. The 4.6 million barrel draw was the smallest draw since the end of April.
US manufacturers reported a further deceleration in growth last month, with the ISM purchasing manager’s index falling to 52.8 in July from 53.0 in June.
Crude oil and gasoline prices closed down in yesterday’s trading by 3.1% to 4.8% and was driven by weaker manufacturing demand from China and parts of Asia, Europe, and the US. Chinese manufacturing unexpectedly contracted in July to a reading of 49.0 from 50.2 in June.
OPEC+ meets this week to determine oil out as a group, as their agreement to cut production winds down.
A global shortage of diesel is making the world more dependent on US fuel exports, with US diesel exports at a 5-year high of 1.4 million barrels per day.