Morgan Stanley See Brent in the $80-85/bbl Range

Morgan Stanely sees oil demand figures coming in better than expected while on a product-by-product basis, China is looking more positive according to its chief commodities strategist, Martijn Rats in an interview with CNBC this week.

• “We started off the year quite cautious, but the data has been coming in better than expected. Since the start of the year, we’ve seen upward revisions to demand – most of us have been raising demand forecasts.” Rats Said.
• “On the supply side, we are seeing a slowdown in US shale, we’ve seen a wobbly start in Brazil, a wobbly start in Canada. We expected inventories to build but a year to date they are kind of flat.” he added.
• “If inventories are flat in Q1 then they can possibly draw quite significantly in the summer period” Rats said.
• On China demand, “jet fuel is good and there is still a lot of demand to come back over the summer.” he said.
• Rats cited the large increase in petchem capacity that’s built in China that will create demand for oil in the form of demand for feedstock. He also referred to driving statistics as being “ok” in China. He expects these stronger categories to carry weakness in the Chinese diesel markets due to things like construction weakness.
• Morgan Stanley see Brent well supported in the $80-85/bbl range.