- Oil heads for the biggest monthly gain since January 2022 as supplies begin to tighten
- September ’23 WTI gains 62c this morning to trade around $81.20/Bbl
- Equities trade higher while the dollar sees a modest uptick
- Saudi Arabia is reducing production by 1 MMBbl/d in July-August, in addition to an earlier 0.5 MMBbl/d cut under the OPEC+ agreement that began May
- Russia has pledged a 0.5 MMBbl/d drop in August oil exports, and ship tracking is indicating that Russian crude exports are already falling
- "Oil prices are up 18% since mid-June as record-high demand and Saudi supply cuts have brought back deficits, and as the market has abandoned its growth pessimism," said Goldman Sachs analysts in a July 30 note to clients
- Also, there's speculation that the Fed is near or at the end of its tightening cycle
- Oil market dips into deficit as demand hits record, says Goldman (Bloomberg)
- Global oil demand hit a record high in July, resulting in a significant market deficit, driven in part by Saudi Arabia's supply cuts, according to Goldman Sachs
- In July, global oil demand hit a record 102.8 MMBbl/d, with 2023 demand projections revised up by 0.55 MMBbl/d to 1.5 MMBbl/d. Strong demand is expected to push the market into a deficit of 1.8 MMBbl/d in 2H 2023
- The bank added that physical markets show signs of strengthening, backed by increased refining margins and physical crude's premium over crude futures
- Although oil market optimism is prevalent, Goldman warns of potential risks, including increased OPEC spare capacity, growth in international offshore projects, and declining US oil production costs
- Hedge funds bet big across energy complex amid price rally (Bloomberg)
- Hedge funds have increased their bullish positions across the energy sector, driven by crude prices crossing $80/Bbl and a surge in gasoline prices
- Net long positions on both the crude benchmarks hit a three-month high while long-only bets on US gasoline futures soared to a 21-month high, according to CFTC and ICE data
- Speculators also increased their bullish bets on NYMEX diesel and ICE gasoil to six-month highs, despite soft domestic demand, largely offset by strong diesel exports