Oil Market About To Enter Supply Deficit
In the latest edition of the Numbers Report, we’ll take a look at some of the most interesting figures put out this week in the energy and metals sectors. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.
Let’s take a look.
1. Oil market entering supply deficit
• The OPEC+ cuts have likely already tipped the oil market into a supply deficit, according to Barclays.
• OECD inventories fell dramatically over the past two years, and came back to the five-year average in 2018, where they have mostly remained.
• The OPEC+ cuts quickly headed off a renewed surplus, and will likely drain inventories over the course of this year. Inventories are set to fall below the five-year average.
• Still, Barclays says the market return to balance or even a small surplus in the second half of 2019.
2. China’s oil demand not collapsing
• Some of the more catastrophic oil forecasts for 2019 centered on a sharp slowdown in Chinese demand.
• China’s car sales actually contracted year-on-year over the last few months, and car sales could continue to fall this year.
• But China’s demand, while slowing relative to years past, is still expected to grow by 0.5 mb/d in 2019, according to Barclays, the same rate of expansion as 2018.
• Next year, however, China’s demand growth could slow a bit more, dipping below 0.4 mb/d, continuing a gradual deceleration in demand growth.
3. Cobalt oversupplied, but in high demand
• Kobold Metals, a startup backed by Bill Gates and Jeff Bezos, is hoping to build a “Google Maps for the earth’s crust,” according to Bloomberg.
• The company is building a database of geological data on cobalt, a metal that is often overlooked but is increasingly important to batteries in electric vehicles and the broader shift towards clean energy.
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