Oil: Gulf supply recovery challenges oversupply narrative – Commerzbank
Commerzbank’s Carsten Fritsch highlights a rapid recovery in Gulf oil production and exports following the US–Iran agreement, with Brent moving into contango and Saudi Arabia slashing its OSP for Asian buyers. Despite sharply higher observed flows, Fritsch argues that mine clearance, restricted tanker traffic and replenishment needs mean the Oil market is unlikely to face a genuine oversupply in the short term.
Gulf output rebounds but risks linger
"Price signals also suggest that oil supplies have risen more sharply than the official data indicate. This is because the front end of the Brent forward curve is in contango. Initially, only the first two futures contracts were affected."
"Last week, however, the contango structure extended to the first four contracts. Another indication could be Saudi Arabia’s sharp cut in the official selling prices (OSP) for August. OPEC’s largest producer is offering Asian buyers a discount of USD 1.5 per barrel on Arab Light compared with the Oman/Dubai benchmark."
"We are therefore sceptical that there will be an oversupply in the short term, as the forward curve currently prices in. Furthermore, the necessary replenishment of stocks is likely to absorb a considerable portion of the oversupply expected next year. The required volume is likely to be around 450 million barrels."
"Over a six-month period, this represents an additional boost to demand of around 2.5 million barrels per day. Author: Carsten Fritsch"
"According to Bloomberg, since the agreement was signed nearly three weeks ago, the total has been almost 90 million barrels, or 4.7 million barrels per day. Yesterday, 13.8 million barrels were recorded – the highest volume of supplies since the end of February."
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Wall Street giants collectively raise rate hike forecasts, US Treasury futures continue to fall, gold drops over 1% to break 4000
After the US October CPI exceeded expectations, Goldman Sachs and Nomura added a forecast for an interest rate hike in March next year, while Deutsche Bank included a forecast for a rate hike in January next year. Currently, the market has fully priced in a 25 basis point rate hike in December, with a 13% probability for a 50 basis point hike. On Wednesday, the US Treasury spot market was closed, but Treasury futures continued to fall, with corresponding yields rising by about 2 to 4 basis points, and spot gold came under pressure, dropping by 1.1%.
No Need to Worry About the Cooling Down of AI Data Center Construction? The US Import Boom Is Unlikely to Subside in the Short Term, Real Impact May Come in 2029
It takes an average of 4.8 years from finalizing investment to starting construction of a data center project, and an additional 2.6 years from construction start to becoming operational. Servers usually cannot be installed until after the building structure and racks are completed. For trade partners such as Taiwan (China), South Korea, and Mexico who rely on US data center supply chain demand, the inertia in construction timelines provides at least a one- to two-year buffer for future exports.
Federal Reserve Major Debate: When Should the Tenure of “Number Three” Williams End?
The main point of contention is whether Williams should step down in June 2028, upon completing a full 10-year term, or in June 2027, when he reaches the mandatory retirement age of 65. Analysts point out that the Federal Reserve Board holds ultimate discretion; if he leaves early, Fed Chair Waller would be able to assert greater control over the appointment to this critical position. However, forcing Williams to shorten his term could easily be interpreted as political manipulation. Williams himself is expected to serve until June 2028.
Crypto prices
More
