![]() ![]() According to data from Kpler, Europe crude oil stocks are already at their lowest since late 2018. Since 15 July, Europe crude stocks have fallen 35 mb, a rate of 362 kbd. If JPM's prediction is correct - and recall just yesterday we published a similar take from Morgan Stanley which now expects a similar "peak supply" scenario playing out, if over the longer term prompting the bank to hike its Q1 2022 price target to $95 from $77.5/bbl - it would have a catastrophic (read higher) impact on the price of oil.Įuropean crude markets are already quite tight. "In any case, in the clearest example yet of market tightness, Cushing crude storage fell to 31.2 mb last week as noted in the chart above. And because operational tank bottoms are likely 20-25% of capacity- or about 20 mb - JPM predicts that "we could be just weeks away from Cushing being effectively out of crude" and adds that "if nothing were to change in the Cushing balance over the next two months, we might expect front WTI spreads to spike to record highs-a “super backwardation” scenario." ![]() ![]() In a note predicting the near-term dynamics of the oil market, JPMorgan's commodity Natasha Kaneva writes that in a world of pervasive nat gas and coal shortages which are forcing the power sector to increasingly turn to oil (boosting demand by 750bkd during winter and drawing inventory by 2.1mmb/d in Nov and Dec), Cushing oil storage - which just dropped to 31.2mm barrels, the lowest since 2018 may be just weeks from being "effectively out of crude." The bank's conclusion: "if nothing were to change in the Cushing balance over the next two months, we might expect front WTI spreads to spike to record highs-a “super backwardation” scenario. Well, in just a few weeks we may see the opposite scenario : no physical oil at all in the largest US commercial storage facility, leading to what may be a superspike in the price of oil. Oil Prices Could Explode As U.S.' Largest Storage Hub Nears Empty Oil fell below 66 a barrel in New York as traders continued to assess if rebounding demand is strong enough to absorb potentially. And a couple of excerpts from an article by our friends at Oilpricecom. Oil declines with return of Iranian supply hanging over market. ![]()
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