Oil Market Report - June 2024

12 June 2024 •World oil demand growth continues to slow, with 2024 gains now seen at 960 kb/d,100 kb/d below last month’s forecast. Weak OECD deliveries pushed global demand intoa narrow y-o-y contraction in March. Subpar growth of 1 mb/d in 2025 is held back by amuted economy and accelerating clean energy technology deployment. •Global oil supply rose by 520 kb/d in May to 102.5 mb/d, as Brazilian ethanol outputsurged seasonally. For the year as a whole, production increases by 690 kb/d, led bynon-OPEC+ gains of 1.4 mb/d. OPEC+ supply falls by 740 kb/d if voluntary cuts aremaintained. In 2025, global supply is forecast to rise by 1.8 mb/d, as non-OPEC+ outputincreases by 1.5 mb/d. •Refining margins in Asia retreated to three-year lows in May and are now close to run cutterritory. US Gulf Coast refining profitability slipped back to six-month lows but remainsabove European levels. 2024 and 2025 crude runs forecasts are 100 kb/d higher thanlast month’s Report, at 83.5 mb/d and 84.2 mb/d, respectively. Stronger OECD 2Q24throughputs outpaced still-weak Chinese runs, which slumped to Covid-era lows in April. •Global observed oil inventories built by 19.3 mb in April. On land stocks surged by83.5 mb after eight-months of draws, while oil on water plunged by 64.2 mb following112.6 mb of increases in the previous two months. OECD industry stocks rose by32.1 mb, its first monthly increase since October. Preliminary data suggest a further48.2 mb build in May. •Brent crude futures fell by $6/bbl in May as inventory builds pointed to a comfortablysupplied Atlantic Basin market. Prices slid another $4/bbl after the 2 June OPEC+meeting, with traders taking a bearish view of the gradual unwinding of last year’svoluntary output cuts. Oil’s price structure weakened in parallel, with front-month spreadsbriefly slipping into contango. At the time of writing, Brent was trading at around$81.50/bbl. Tables of contents Adjusting lower......................................................................................................................... 3Demand...................................................................................................................................... 4Supply........................................................................................................................................ 7Refining ..................................................................................................................................... 8Stocks ...................................................................................................................................... 12Prices ....................................................................................................................................... 15Freight ................................................................................................................................... 17Russian trade and revenus ................................................................................................... 18Tables ...................................................................................................................................... 19 Note to Subscribers: This month’sReportis abbreviated, as we are simultaneously publishing ourannual medium-term outlook, Oil 2024 – Analysis and Forecast to 2030. Thefollowing overview focuses on the short-term forecast that extends to 2025. The usual OMRformat, with written analysis, will resume for the 11 July edition. Adjusting lower Brent crude futures continued to slide in May and early June, as flagging oil demand growth andinventory builds pointed to a comfortably supplied market. Brent futures fell by $6/bbl in May, beforetumbling further in early June after the OPEC+ alliance announced plans to gradually unwind lastyear’s extra voluntary output cuts starting in 4Q24. Traders’ initial response was overwhelminglybearish, with prices falling to a low of around $77.50/bbl, but OPEC+ officials quickly reiterated thata rollback of output reductions will be contingent on market conditions. At the time of writing, Brenthad rebounded to $81.50/bbl – still about $11/bbl below early April’s 2024 highs. InMay,global observed onshore oilinventoriesswelledforasecondconsecutive month as lacklustre demandmet with robust oil supply. Preliminary,albeit incomplete, data show oil stocksrising by 48.2 mb last month, led by theUnited States and China. The increasecomes on top of a 19.3 mb build in April,when on-land stocks surged by 83.5 mbafter eight months of draws. Oil on waterplungedby 64.2 mb,however,partlyreversing the 112.6 mb increase seenoverthe previous two months.OECD industry inventories rose in by April 32.1 mb, largely in line with seasonal trends, but remained94.7 mb below their five-year average. These stock builds come amid continued oil demand slowdowns in key markets, most notably theOECD. US and European data undershot expectations as exception