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Tug of War to Continue: Oil Market

Minneapolis, MN | May 30, 2023 | By: Steve Sinos, Blue Lacy Advisors, LLC

IEA says S/D balances will tighten in 2H23, but macro risks persist, making it impossible to be certain.

Three Things: Oil Market

  1. The IEA published its May Oil Market Report (OMR). They highlight the volatility of the fundamentals while projecting tighter markets in the second half of the year.

  2. Notable trends include rising refinery runs, persistent Russian exports, and unplanned outages causing a net drop in oil production, which led to a decline in inventory.

  3. Tightening credit and associated macroeconomic risks threaten to overwhelm this otherwise bullish trend.

IEA OMR Sees Balances Tightening

The most recent IEA OMR revised expected global oil demand upward by 2.2mm bpd, again emphasizing China’s contribution to demand growth. Despite more than a year of falling short, analysts continue to predict demand acceleration from China and expect >%60 of global growth to be driven by China (1.3mm bpd of global 2.2mm bpd growth). Maybe they’re finally right. During the first three weeks of May, waterborne imports into the country have averaged >12.6mm bpd, up from 11.5mm bpd during April and >2.5mm bpd above May 2022’s average.

*This summary is based off May 21, 2023

A free excerpt, such as this one, will be published on a delay periodically. This is an excerpt from Blue Lacy Advisors, LLC's (“Blue Lacy”) weekly commentary for clients, which is based on a collection of models, research/analytical subscriptions, and bespoke work. Each week Blue Lacy explores how market drivers included in these analyses might affect or be used in clients' planning, budgeting, and execution of strategy. Call Blue Lacy to make an appointment today!


Meet the Author!

Phone: +1-832-413-3124

Steve has spent his career in strategy, risk, trading, and investment. He works with investors to source investments in opportunistic or high growth sectors, with particular interest in early-stage companies solving clearly defined problems.

He is currently a Managing Partner with Blue Lacy Advisors LLC, giving management teams and investors confidence in their decision making by supporting strategic planning and execution, risk management, commodity trading, and market analysis.

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