Oil prices remain steady amid declining demand forecasts, despite declining US inventories

For two weeks now, oil prices have remained stable, as the increase in global production is offset by forecasts of a reduction in demand. In the Russian Federation, oil production increased, but its exports decreased in April, but soon, together with other OPEC+ countries, the Russian Federation may increase exports.

July Brent oil futures on the ICE Futures exchange in London yesterday rose by 0.4% to $82.8/barrel (-0.8% for the week, -7.5% for the month).

The International Energy Agency (EIA) lowered its forecast for global fuel consumption in 2024 by 140,000 barrels/day to 1.1 million barrels/day compared to April estimates. At the same time, OPEC predicts an increase in world oil demand in 2024 to 2.25 million barrels/day and in 2025 to 1.85 million barrels/day.

The quote supports the reduction of crude oil stocks in tankers that have been parked for at least a week, as of May 10, by 11% to a 4-year low of 55.92 million barrels.

According to the EIA, during the week crude oil reserves in the US decreased by 2.51 million barrels (with expectations of 600 thousand barrels), and gasoline - by 235 thousand barrels, while experts expected their increase by 1 million barrels.

Oil prices could be negatively affected by disputes within OPEC+, as the UAE, Iraq, Algeria and Kazakhstan will push for an increase in production quotas at a meeting on June 1, while Saudi Arabia opposes it.

However, the Russian Federation increases oil production without warning, which reached 9.418 million barrels/day in April, which exceeded the target of 9.1 million barrels/day agreed with OPEC+ by 300,000 barrels/day.

According to the EIA agency, in April compared to March, the Russian Federation decreased its export of oil by 6.4% to 7.3 million barrels/day, and oil products by 15% to 2.3 million barrels/day.

Urals oil during the week traded at the level of $70/barrel (-20.9% for the month).

High prices for Russian oil partially compensated for the decrease in export volumes. In March, the Russian Federation received $18.4 billion from the export of oil and petroleum products, and in April - $17.2 billion. According to the Ministry of Finance of the Russian Federation, oil and gas revenues of the budget for the 4 months of 2024 increased by 82% compared to the same period last year. The budget for 2024 foresees an increase in oil and gas revenues by 30% compared to 2023 to 11.5 trillion rubles, which will make up a third of the planned budget revenues.

As a result of Ukrainian UAV attacks on Russian refineries, fuel exports for May 6-12 decreased compared to the previous week by 440,000 barrels/day to 3.24 barrels/day, which is the lowest figure in the last 8 weeks. Further attacks will continue to reduce the export of oil products and prevent an increase in oil exports from the Russian Federation, which will lead to a decrease in world oil prices and fuel shortages within the Russian Federation.