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Oil Caught Between Bearish Refined Products and Bullish Crude Fundamentals


The oil market is currently caught between the weak macro picture and bearish refined product markets, and bullish crude fundamentals. Economic refinery run cuts would need to be substantial for bearish products to impact the bullish crude according to Vortexa.

The two more extreme future scenarios according to Vortexa are:

  • The world moves into recession and oil product demand falls by so much that the OPEC+ voluntary cuts are justified and may even be followed up with more action.
  • The seasonal upside to demand and China’s ongoing comeback are resilient enough to overcome wider economic challenges. Then the world may run out very quickly of crude oil. Their data suggests that so far OPEC+ countries have implemented very limited if any production cuts and the global inventory cushion is also low, including depleted US SPRs. OPEC spare capacity estimates may well be very low.

Source: Vortexa

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