Standard Chartered has shot down a rising Wall Street narrative that global oil markets are sitting on a hidden cushion of non-OECD crude, so-called phantom barrels. In its latest Commodity Roadmap released this week, the bank states there is “nothing in trade flows, time structure, or data flow” to support claims of invisible inventory builds, particularly in China or South Africa.
The rejection puts StanChart at odds with macro-driven oil bears who argue that low OECD stockpiles are masking oversupply elsewhere. Instead, the bank’s view is that the market is near balance and the data simply doesn’t back the surplus story.
This stance comes as OPEC+ prepares to roll back the remainder of its November 2023 voluntary cuts. After approving a 548,000 bpd increase for August, the group is widely expected to approve a final 584,000 bpd hike at its 3 August meeting. That would fully unwind the second tier of coordinated supply reductions.
“The November 2023 tier would be rolled back completely by another 584kb/d increase in targets at the next meeting (3 August), and we expect ministers to take that decision. Reversing the November 2023 voluntary cuts completely brings the first tier (agreed in April 2023) into focus. This tier totals about 1.65 million barrels per day (mb/d), although with output constraints starting to affect some countries, we would not expect output to increase by more than 0.8mb/d if the April 2023 tier were also to be rolled back,” StanChart notes.
StanChart sees the physical market tightening, not weakening. It forecasts a modest global draw of 0.1 million bpd in Q4 2025 and notes that non-OPEC+ supply growth continues to underperform expectations.
Meanwhile, U.S. oil activity is slipping. The Baker Hughes rig count dropped for the tenth straight week, hitting a 45-month low of 425. Midland Basin rigs alone fell by six last week, hitting a four-year trough.
While some traders fear the OPEC+ increases hint at a return to market-share competition, Standard Chartered disagrees. “We see no signs,” the report states. “Assuming the rest of the November 2023 tier is rolled back in the next OPEC+ eight meeting, we forecast a near balanced global market in Q4-2025 with a small 0.1mb/d draw. We forecast strong demand will absorb the extra OPEC+ barrels and that non-OPEC+ supply increases will continue to disappoint relative to consensus.”
By Charles Kennedy for Oilprice.com
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