The update from the bank comes amid falling oil prices, pressured by changing outlooks on demand as the pick-up that started in May and continued through July is showing signs of a slow-down, raising doubts about its sustainability.
Among the latest of worrisome signs, Saudi Arabia said it would cut its official selling prices for crude in a move hardly anyone expected given the Kingdom’s upbeat stance on oil demand. Separately, reports of rising oil and fuel inventories in floating storage pressured benchmarks as commodity traders chartered tankers to store fuel and crude offshore.
The news of rising floating storage is particularly worrisome because it means that onshore storage space is still full, despite a moderate increase in fuel demand after most lockdowns eased in May.
In further bad news, Bloomberg reported that Chinese oil imports continued to fall in August, after they fell in July from a record-high in June. Even though a decline from the record-high June import rate could be expected, the information did not help an already sensitive market. Further declines are on the way, Bloomberg noted, as the state import quotas issued to independent refiners fill up.
The institution recognized the hesitancy of global economic recovery in this scenario as well, noting that it remained doubtful whether things would return to pre-pandemic normalcy.
Author: Irina Slav
