*OPEC Output Lowest Since 1991*
OPEC after the pandemic hit has been desperately trying to support prices with supply cuts. The effect of their latest agreement will cut output to levels not seen since 1991. This has been delivered through a combination of extra cuts from Saudi Arabia and better compliance from other slacking agreement countries. Production was cut 1.93 million bbls a day in June to a total of 22.69 million.
*Venezuela Down and Out*
To trump the 1991 record of OPEC, Venezuela’s export have crashed to their lowest levels since 1943 according to Reuters. US sanctions have dissuaded tankers from docking in the country, with data showing that there were only 17 cargoes or 379,000 bpd of crude and refined products shipped in June.
*Goldman Eyes 2022 for Demand Return*
The bank has revised it figures to predict that the market will return to pre-virus demand levels. They expected demand to fall 8% this year, rebound up 6% in 2021, before fully recovering in 2022. They expect products such as gasoline to make quicker come backs than jet fuel, as air travel suffers for several years to recoup its losses after the pandemic.
*Citi Pessimistic on Oil Products*
Citigroup believes that demand for oil products will never recover to pre-virus levels. The pandemic has wiped out some 30% of demand for oil, and this coupled with asset sales of oil majors and predictions of lower crude prices long term indicate that demand has already hit its peak and won’t be returning.
*Weak Sentiment for Asian Distillates and Gasoil*
Premiums for gasoil and distillates look set to continue their drop as the market weighs up returning refining to the market and its impact on an already embattled product market. Singapore gasoil cracks were at $6.84/bbl over Dubai crude, and it is expected that these margins will stay around historically low levels for the foreseeable future. Middle-distillate inventories in the Fujairah Oil Industry Zone dropped 19.1% to 4.1 million barrels in the week ended June 29, data via S&P Global Platts showed, and U.S. distillate fuel inventories rose by 2.6 million barrels.