RECORD OIL PRICES ARE NOT AT A TURNING POINT, THEY ARE HERE TO STAY FOR NOW

Will record petrol prices remain and should you buy or sell the futures?


Over the past few weeks, the stock market has taken a beating.

Stocks are up a little one day and down a lot more the next day and the next day…

But there’s something that isn’t going down: the cost to fill up your petrol tank.


This week, the national average petrol price hit a new record in the UK and the USA as well as other countries.

t’s out of control!

Unfortunately, it’s not going to get better until global oil companies ramp up production to fill the massive supply gap.

As we head into the summer, demand for gas will continue to surge.

Investment bank Credit Suisse forecasts a supply deficit of about 2.2 million barrels a day in the second half of the year.

So prices will continue to go up.


Satoru Yoshida, a commodity analyst with Rakuten Securities told Economic Times: “A slump in Wall Street soured sentiment in early trade as it underlined concerns over weakening consumption and fuel demand.”


However.


Mr Yoshida said: “Still, oil markets are keeping a bullish trend as a pending import ban by the European Union on Russian crude is expected to further tighten global supply.”

The European Union this month proposed a new package of sanctions against Russia for its invasion of Ukraine.

This would include a total ban on oil imports in six months' time, but the measures have not yet been adopted, with Hungary being among the most vocal critics of the plan.

Also, US crude inventories fell last week, an unexpected drawdown, as refiners ramped up output in response to tight product inventories and near-record exports that have forced US diesel and gasoline prices to record levels.


Capacity use on both the East Coast and Gulf Coast was above 95 percent, putting those refineries close to their highest possible running rates.


The US Energy Information Administration estimates that stocks of US distillates – typically diesel and petrol – fell 8 percent in March to 24 percent below the five-year average.


Refining oil for petrol is historically more valuable for refineries, but Russia was a large diesel exporter meaning demand for diesel refining elsewhere has pushed up the price from refineries in other countries.

Daily chart shows post covid and Russian sanctions have spurned on demand for oil and caused the prices to continue to rise.


China & Covid.


Oil Hits Eight-Week High Amid Hopes Of Recovering Chinese Demand.

After weeks of concerns over weakening Chinese demand amid the tightest COVID-related restrictions in the country since the onset of the pandemic, the oil market is now looking with cautious optimism to comments from Chinese authorities that Shanghai may return to more or less normal life as of June 1. A reopening could incentivize oil demand in the world’s top crude importer after weeks of depressed fuel consumption weighing on global oil prices.


Chinese refiners slashed crude processing by 11 percent annually in April due to weak demand. Yet, analysts and traders expect April to have been the bottom of the crude runs and fuel demand, and forecast a rebound in refinery run rates in May and fuel consumption in June.


Oil prices “returned to an eight-week high overnight after China signalled it would start unwinding lockdowns in the Shanghai area. Also underpinning prices is the continued strength in fuel products driven by strong demand and restrained refining capacity,” Saxo Bank said in a daily commentary on Tuesday.


“Global demand has yet to show signs of meaningful demand destruction and with Chinese demand starting to recover the risk of higher prices remains, not least considering Europe’s continued efforts to reduce its dependency on Russian oil and gas,” the bank’s strategy team noted.