From Oil Price News, June 08, 2020
Oil prices have likely risen too fast too soon with the market focusing on supply cuts, while global oil demand may not return to pre-COVID-19 levels before the end of 2021, according to Morgan Stanley.
The oil price rally in recent weeks “appears mostly supply- rather than demand-driven, and it is questionable how strong refinery runs can increase against this backdrop,” the investment bank said in a note on Monday, as carried by Reuters.
While the market is heading for deficit in the second half of the year, there are a lot of inventories – at an unusually high level – which will start shrinking in Q4 and in the first quarter next year, Morgan Stanley said.
Despite the continuous market-fixing efforts in supply by the OPEC+ group, the world’s consumption of oil is unlikely to return to the levels before the coronavirus pandemic until late next year, according to the bank.
Other concerns about an oil price correction include U.S. shale restarting too much production as prices rise, as well as a sharp rise in oil production when OPEC and allies start unwinding the cuts, Morgan Stanley says.
Oil prices have likely risen too fast too soon with the market focusing on supply cuts, while global oil demand may not return to pre-COVID-19 levels before the end of 2021, according to Morgan Stanley.
The oil price rally in recent weeks “appears mostly supply- rather than demand-driven, and it is questionable how strong refinery runs can increase against this backdrop,” the investment bank said in a note on Monday, as carried by Reuters.
While the market is heading for deficit in the second half of the year, there are a lot of inventories – at an unusually high level – which will start shrinking in Q4 and in the first quarter next year, Morgan Stanley said.
Despite the continuous market-fixing efforts in supply by the OPEC+ group, the world’s consumption of oil is unlikely to return to the levels before the coronavirus pandemic until late next year, according to the bank.
Other concerns about an oil price correction include U.S. shale restarting too much production as prices rise, as well as a sharp rise in oil production when OPEC and allies start unwinding the cuts, Morgan Stanley says.