Global oil inventories are falling at an accelerated rate, Goldman Sachs has warned, noting April draws from inventories had run at double the rate until the end of March.
Since the start of May, global draws from inventories have been running at 8.7 million barrels daily, which is the highest ever, the investment bank’s analysts said. “Physical markets continue to tighten, as estimated oil exports through the strait remain at a very low 5% of normal,” they said.
Earlier this month, Goldman said that global oil inventories were crashing and approaching an eight-year low, with the rate of depletion so fast that it exposes the market to further shocks. Total oil inventories globally have dropped to about 101 days of expected demand, the lowest level in nearly eight years, the bank’s analysts warned, adding that while inventories are “unlikely to hit minimum operational levels this summer, the speed of depletion and supply losses in some regions and products is concerning.”
Citi, meanwhile, earlier this week said that traders may be underestimating the risk of a longer-term oil supply disruption from the Middle East war. “It appears increasingly likely, in our view, that the Iranian regime will disrupt SoH flows for some time,” the bank told its clients in a note, as quoted by CNBC, predicting that should the disruption continue, oil prices could hit $200 per barrel.
In the nearer term, the bank sees Brent crude inching up to $120 per barrel from the tanker traffic disruption in the Persian Gulf. On the other hand, if Iran and the United States reach a peace deal by the end of June, Brent crude could retreat to $80 per barrel by the end of the year, according to Wood Mackenzie.
Currently, Iran is reviewing the United States’ latest peace proposal, after President Donald Trump this week signaled optimism about a deal but also issued a threat to Iran unless things went his way.
By Irina Slav for Oilprice.com
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