Global Commodities: Bullish oil cues begin to exhaust even as Russia temporarily bans motor fuel exports

After reaching our target of $90 in September, further price gains may be limited as we believe most bullish cues—both macro and micro—for the market have been exhausted for now. Our end-year target remains $86/bbl, while acknowledging that the path to this target can take different shapes. Relative to July, macro sentiment in September might be close to an inflection as the focus shifts to higher-for-longer US rates and sticky inflation. With pump prices surging and a seasonal travel peak behind us, oil demand risks are shifting to the downside and the support of China’s pent-up demand recovery is likely behind us. Russian crude oil exports rebounded by more than twice than expected in September and fuel exports booked prior to the ban continue to flow while China’s oil product exports are also rising. Oil positioning is no longer short. Our view remains that sharp inventory draws in 3Q23 will transition into a slight build during the final four months of the year. Preliminary stock observations suggest a build in global oil inventories in the first week of September.  

Speaker
Natasha Kaneva, Head of Global Commodities Research 

This podcast was recorded on 22 September 2023.

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