- Oil prices rose as OPEC maintained strong demand growth forecasts for 2024 and 2025.
- Decrease in US fuel stocks: more than 7 million barrels of gasoline
- Global shipping disruptions and the Suez Canal bypass are pushing up crude oil prices and reshaping supply routes to Europe.
Oil markets saw a big increase on Wednesday, with Brent crude futures rising to $82.93 per barrel and West Texas Intermediate crude reaching $77.98. This rise reversed previous losses and was supported by OPEC's confirmation of strong demand expectations, with demand expected to increase by 2.25 million barrels per day in 2024 and 1.85 million barrels per day in 2025. The widening range of the default in Brent crude futures indicates a decline in demand. . Higher demand for immediate delivery compared to future supplies highlights signs of strengthening demand. Analysts from ING noticed this trend, noting a noticeable increase in futures spread from April to May, indicating tightening market conditions.
Decrease in US fuel inventories: 7 million barrels of gasoline and 4 million barrels of distillates
In the United States, fuel inventories saw a significant decline, largely due to the closure of BP's Whiting refinery. Gasoline inventories fell by more than 7 million barrels, and distillate inventories fell by 4 million barrels, exceeding analysts' expectations. Meanwhile, US crude oil inventories rose unexpectedly, indicating a complex mix of supply dynamics amid refinery outages and logistical issues.
Navigating supply chains: Europe adapts to the Suez Canal bypass
The oil market is also affected by geopolitical and logistical challenges, especially around the Red Sea and the Suez Canal, leading to a reorganization of global shipping routes. With turmoil causing market tightness and rising diesel prices, Europe is adjusting its reliance on Middle Eastern and Asian supplies. The continent is increasingly turning to American and West African crude, choosing the longer journey via the Cape of Good Hope rather than the traditional Suez Canal route. This strategic shift not only raises shipping costs, but also intensifies the backwardation in Brent crude futures.
