Standard Chartered Flags Bearish EIA Data
The partial mobilization of Russian reservists temporarily boosted oil prices on September 21 before bearish Energy Information Administration (EIA) data reversed those gains, a new report from Standard Chartered noted.
“The latest data is exceptionally weak; our oil data bull-bear index shows an ultra-bearish -100, ranking this release as the weakest in the past 10 years,” Standard Chartered stated in the report, which was sent to Rigzone late Wednesday.
“Inventories of crude oil and every product except jet fuel rose week on week both in absolute terms and relative to the five-year average. The combined week on week build against the five-year average was 12.25 million barrels reducing the deficit to a 13-month low of 54.81 mb, 96.86 mb less than early June’s peak,” Standard Chartered added.
In the report, Standard Chartered stated that the latest demand data is also “exceptionally weak”.
“Gasoline demand for September to date is lower year on year by 5.6 percent, while implied distillate demand is 18.3 percent lower year on year. Both gasoline and distillate demand are now lower year to date,” Standard Chartered noted.
“EIA data has been overwhelmingly negative since early June when the inventory deficit began to shrink; only two of the past 15 EIA releases have been bullish. We think this bearish bias is likely to persist for another couple of months, by which time the inventory deficit is likely to be insignificant,” Standard Chartered added.
“The strong inventory builds have been fed by a global oil surplus in Q3, we estimate it at 1.8 mb per day, and U.S. strategic reserve releases have made an additional 0.9 mb per day of crude oil available over the past three months,” the company continued.
Standard Chartered revealed that it expects a smaller global surplus in the fourth quarter and highlighted that U.S. strategic releases are currently set to taper in November and end in December.
“Both factors should help make the data flow more of a two-way street, but until then positive bull-bear readings are likely to remain rare,” Standard Chartered stated in the report.
In a separate report sent to Rigzone last week, Standard Chartered notes that its oil data bull-bear index was “highly bearish” for the third consecutive week, falling 8.3 week on week to -70.0.
“Early indications of September demand are weak; demand for all products is lower year on year except other oils. The distillate data was particularly weak with a sharp 4.22 mb inventory build and the lowest implied demand in 20 months,” Standard Chartered stated in that report.
At the time of writing, the price of Brent and WTI stood at $88.61 per barrel and $81.57 per barrel, respectively. The prices of both commodities have been steadily dropping since June.
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