Strong in the Short Term, But What Does the Future Hold for Oil?
Global oil prices stabilized after two consecutive days of declines, amid signs of a tightening market, particularly for diesel fuel. Brent is trading near $69 per barrel, with a premium of 90 cents to spot prices, indicating tight short-term supply. Holiday season demand in the US is driving consumption, while distillate stocks (including diesel) have fallen to their lowest level since 2005. Meanwhile, market participants await the official US crude oil inventory report, after industry projections showed a slight increase in stocks last week.
Despite lingering concerns about the impact of Trump's tariffs on demand, oil prices have remained strong since May. Morgan Stanley believes that most of the increase in global stocks has been absorbed by the market without significantly depressing prices. The backwardation structure in the Brent market—where short-term prices are higher than long-term prices—illustrates strong current demand. However, the threat of a supply surplus from the OPEC+ plan and long-term uncertainty remain key concerns.
Source: (ayu-newsmaker)
