Macquarie Group Announced Latest Oil Market Outlook

SEATTLE (Oil Monster): Macquarie, in its latest market outlook report, said that it remains “short-term bullish but structurally bearish” on the oil market, following the OPEC+ meeting last weekend.

According to Macquarie strategists Vikas Dwivedi and Walt Chancellor, the direct crude balances through Q3 2023 is expected to further tighten, driven by rise in refinery runs, extra-seasonal ME power burn and output cuts by OPEC countries. The U.S. and N.Sea production growth coupled with OPEC+ non-compliance will result in a correction in Q4 this year and 2024, they noted.

The ease of oil production growth will bring about structural challenge for the oil market. This is expected to persist for several years.

The U.S. refiners will need heavier, sour barrels as much of the domestic supply is light and sweet. The refineries will heavily be dependent on heavy, sour crude imports from the Middle East, Mexico, and South America.

The strategists highlighted that the macro concerns attributed to the impact of recession on demand will potentially limit the ability for OPEC+ intervention to support price. The Chinese demand growth will play a major role in crude balance. The country will contribute almost 35% of the global demand growth in 2023, the analysts said.