Brent Oil to close above $70 by mid-week – OCBC
|Brent closed 0.5% lower at $68.88/bbl, although it rose to as high as $70.03/bbl during intraday trading on Monday. The strength of the US consumer should not be underestimated and that should be further bolstered by the arrival of the $1400 checks beginning this week. What’s more, gasoline demand is well supported and that is likely to translate into gains for the crude oil market, Howie Lee, Economist at OCBC Bank, reports.
See: Brent Oil to ease back towards $70 by end-2021 after peaking at $80 – CE
Key quotes
“Assuming a typical barrel of US crude oil yields 45% gasoline, on a net basis the total gasoline stocks (crude oil + gasoline) in the US last week stands at 456 M barrels, which means for the first time this year that aggregate is lower than the 5-year average. This quick decline of stocks is largely seen in the quick pace of gasoline stock drawdown, which fell 25.5 M barrels over the past two weeks as the US cold snap thawed but refineries still faced difficulties getting back to work.”
“American consumers are up and about on the move again but supply-side difficulties – with the US refinery utilization rate still at a dismal 69.0% - has added to the oil market’s bullishness.”
“With the $1.9tn fiscal stimulus sealed and the $1400 checks expected to begin arriving as early as this week, the demand for energy looks like it may continue creeping higher.”
“We see Brent possibly closing above $70 by mid-week.”
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