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The pace of the upward momentum last week has largely been a factor of the contrasting range of macro economic sentiment set against the backdrop of a fundamental demand supply equation that remains finely balanced, a..

01 Apr 2013

LONDON (Commodity Online): Globally crude oil is expected to witness a healthy demand in the second quarter of 2013 as a result of return of refineries from maintenance and growing consumption, stated London based Barclays in its recent market outlook.

“To meet this increased call on crude, we expect a slight improvement in supplies, which would help to create a well-balanced market,” it added.

Front month Brent edged higher over the week, registering marginal gains and trading in a tight intra-day range since Monday.

While the price movement continues to represent a reversion towards the $111/bbl level, the market has been trading around since the start of the year.

The pace of the upward momentum last week has largely been a factor of the contrasting range of macro economic sentiment set against the backdrop of a fundamental demand supply equation that remains finely balanced, a situation is expected to continue.

Meanwhile, a slight improvement in supplies is expected, helping to match these requirements (a return of volumes from Sudan should help to reduce non-OPEC shortfall, and healthy output from OPEC producer Angola).

There are positives lending support, risks of a relapse elsewhere on the supply system from geopolitical undercurrents remain abundant.

Evidence of these elements has emerged in the physical markets; in the US, as refinery maintenance winds down, regional crude markets have been well bid.

Globally, relatively rich crude oil loading programmes in Q2 (eg. West Africa) have met with active tenders from refineries (on either side of the Suez).

Global refinery utilisation rates are expected to pick up further on a combination of relatively attractive margins and the requirement for replenishing product inventories that have been drawn down.

Product inventories globally were relied on quite heavily in Q1 on the back of relatively high refinery maintenance, as well as higher-than-normal heating degree days in the Northern Hemisphere.

A key instance of the supply system being able to meet this increased call for crude is seen through the healthy volume of trading activity seen across the West African market this week, on May cargoes.


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