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OIL: Citigroup See Bullish Pressures with Seasonal Summer Tightness

OIL

Oil faces bullish pressures with seasonal tightness over the peak summer season, according to Citigroup.

  • Global crude and products are forecast at a deficit of around 200kb/d in Q3 2024 and especially on the crude oil side.
  • “The seasonal demand increase, as shown by the latest EIA data, renewed confrontation between Israel and Hezbollah, and the hurricane season could sustain price strength into the summer.”
  • Financial positioning had been historically short, setting up for a pick-up in prices into Q3.
  • Refinery runs are also ramping up on a m/m basis. "Based on IIR data, we estimate 1.5-mb/d of refinery capacity returning from maintenance this month, followed by another 2.5-mb/d the next month"
  • Improving diesel cracks are offsetting weakening gasoline to stabilize refining margins and incentivize increased runs.
  • Earlier this month Citigroup forecast a three month Brent target of $82/bbl before falling during Q4 and into next year.
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