Demand Outlook Darkens
The demand outlook has darkened.
That’s according to a new research note from financial services company Standard Chartered, which was sent to Rigzone late last week.
The note outlined that the latest Energy Information Administration (EIA) data release was the “second-weakest reading this year” and said it represented a “giant step backwards” from the previous week’s improvement.
“Our oil data bull-bear index fell 128.5 week on week to -83.4, which categorizes the data as ‘ultra-bearish’,” Standard Chartered’s report stated.
“The demand side of the data was particularly poor. Our demand sub-index fell 52.8 week on week to -96.1. The only weaker reading this year was in the first week of April (-100.0),” the note added.
“Implied gasoline demand fell for the second successive week. At 8.55 million barrels per day (MMbpd) it was the lowest in any July week since 2000. Total U.S. oil demand fell 826,000 barrels per day week on week to 17.654MMbpd, the lowest July reading since 1996,” the note continued.
In its latest report, Standard Chartered outlined that it thinks the demand outlook is weakening, with new coronavirus cases still rising in “key gasoline-consuming states” and a “sluggish” manufacturing and associated freight recovery.
“Recent price dynamics do not in our view reflect the darkening of the demand and economic outlook,” Standard Chartered said in the note.
“While the inventory surplus should resume a gradual downtrend in coming weeks, we are becoming increasingly pessimistic about the demand outlook,” the note added.
The company went on to state, however, that it thinks the oil market might not lose its “buoyant optimism” until there are further lockdowns.
As of July 26, there have been 15.7 million confirmed cases of the virus globally, with 640,016 deaths, according to the latest figures from the World Health Organization.
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