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Oil Market About To Enter Supply Deficit

Oil Market About To Enter Supply Deficit

Refinery China

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.

 …click on the above link to read the rest of the article…

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