Despite the decline in US stockpiles, oil prices remain stable amid forecasts of lower demand

Oil prices have remained stable for two weeks now, as an increase in global production is offset by forecasts of declining demand. Russian oil production increased, but its exports decreased in April, but soon, along with other OPEC+ countries, Russia may increase exports.

July futures for Brent crude oil on the ICE Futures exchange in London yesterday rose by 0.4% to 82.8 $/barrel (-0.8% for the week, -7.5% for the month).

the International energy Agency EIA lowered compared to the estimates of April forecast of world fuel consumption in 2024 by 140 thousand barrels/day to 1.1 million barrels/day. At the same time, OPEC predicts an increase in global oil demand in 2024 to 2.25 million barrels/day and in 2025 to 1.85 million barrels/day.

The quotes are supported by a decline in crude oil stocks in tankers that have been at berths for at least a week, as of May 10, by 11% to a 4-year low of 55.92 million barrels.

According to the EIA, crude oil stocks in the US decreased by 2.51 million barrels over the week (against expectations of 600 thousand barrels), and gasoline stocks by 235 thousand barrels, while experts expected them to increase by 1 million barrels.

Oil prices may be negatively affected by disputes within OPEC+, as at the meeting on June 1, the UAE, Iraq, Algeria and Kazakhstan will insist on increasing production quotas, while Saudi Arabia is against it.

Nevertheless, without warning, Russia is increasing oil production, which in April reached 9.418 million barrels per day, which is 300 thousand barrels per day higher than the target of 9.1 million barrels per day agreed with OPEC+.

According to the EIA agency, in April, Russia reduced oil exports by 6.4% to 7.3 million barrels/day and oil products by 15% to 2.3 million barrels/day compared to March.

During the week, Urals crude oil was trading at $70 per barrel (-20.9% for the month).

High prices for Russian oil partially offset the decline in exports. In March, Russia received $18.4 billion from the export of oil and oil products, and in April – $17.2 billion. According to the Ministry of Finance of the Russian Federation, oil and gas budget revenues for 4 months of 2024 increased by 82% compared to the same period last year. The budget for 2024 envisages a 30% increase in oil and gas revenues compared to 2023, up to 11.5 trillion rubles, which will account for a third of the planned budget revenues.

As a result of Ukrainian UAV attacks on Russian refineries, fuel exports for May 6-12 decreased by 440 thousand barrels/day to 3.24 barrels/day compared to the previous week, the lowest level in the last 8 weeks. Further attacks will continue to reduce exports of petroleum products and prevent an increase in oil exports from Russia, which will lead to lower global oil prices and a fuel shortage in Russia.

Tags: prices