June 11, 2024

Tightening balances in the coming weeks to support prices once again

The global crude and condensate balance across 2024 has become significantly more bearish than last month’s iteration, driven mainly by demand-side forces. While the surpluses for January and February 2024 have remained relatively similar to last month, March kicks off a series of months where surpluses have extended, or deficits have narrowed.

This is the result of downward revisions across the year to refinery runs in Algeria and UAE, which have been revised lower by 140 kbd and 270 kbd, respectively, across 2024, while Indian refinery runs have been reduced by 100 kbd across Q2 and Q3 due to them previously being too optimistic. We have also adjusted Venezuelan refinery runs lower due to the reimposition of sanctions. At the same time, Russian demand has been reduced by 125 kbd annually due to the removal of our previous assumption that the country uses 125 kbd for direct crude burn for power generation. On the supply side, the most significant adjustment made is to Brazilian production, which we have lowered across the year, driven by weak official data in Q1. On the upside, we have lifted Canadian output while also boosting production out of Chad and adding production from Niger to our global balance.

March’s global surplus has doubled to 1.3 Mbd versus last month, driven by a significant 800 kbd downward revision to refinery demand. This theme is continued across the global balance for the rest of the year: April’s surplus has extended to 2.2 Mbd while May has moved from being close to balanced to a material surplus of 740 kbd. June’s deficit has nearly halved to 1.2 Mbd, while July and August have seen their deficits narrow from above 3 Mbd last month to 1.8 Mbd. September’s deficit narrows from 1.4 Mbd to close to balanced while October has flipped back to a surplus of 830 kbd after moving to a deficit in recent months. All in all, a combination of downward revisions in refining activity across the year to a number of countries has skewed our balances to be much less supportive of prices than they have previously appeared.  

Global crude and condensate balance, kbd

Source: Kpler

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