- U.S. crude oil stocks grow at slower pace, refining picks up
- 2H non-OPEC supply could fall by 5.7m b/d due to capex drop
Sentiment in the oil market has started to improve.
Several European countries and U.S. states plan to restart their economies in phases, many as early as this month. Road congestion levels are picking up in some major Chinese and European cities, while Chinese flight departures have grown for the third consecutive week.
Global refining margins have also made gains in recent days, aided by a low crude prices and a strong recovery in oil product cracks. U.S. gasoline cracks grew $10 a barrel within a span of five trading days, to around $22 a barrel. A sustained recovery in margins would increase refining runs and lift demand for crude oil.
The oil price shock has triggered a significant reduction in upstream capital expenditure, which alongside aggressive OPEC+ production cuts, looks set to remove a significant volume of oil supply from the market in the second half of the year.
This reduction in supply coupled with a recovery in demand could tilt the market into a supply deficit in 2H 2020, driving crude prices higher.
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