Analysts Predict US Crude Stocks to Decline and Reach Levels Below Last Year – The Daily Guardian
Title: US Crude Oil Stocks Plummet to Lowest Levels of the Year, Analysts Predict Upward Pressure on Global Oil Prices
In a year marked by unprecedented demand, US crude oil stocks have reached their lowest level and are expected to continue shrinking. The combination of record demand, producer supply cuts, weaker futures, and rising storage costs has contributed to this significant decline.
Analysts forecast that the tight crude market will persist until 2024, resulting in upward pressure on global oil prices. This projection comes after the most recent week saw US inventories drop by a staggering 10.6 million barrels, hitting the lowest level since December 2022.
The soaring demand for oil is primarily driven by strong air travel, rising power generation needs, and surging Chinese petrochemical activity. Experts anticipate that this year will witness record-high levels of oil consumption. However, there are concerns that the supply may not be able to match the increase in demand. Projections indicate that daily output will only rise by 1.5 million barrels, leaving a significant gap to be filled.
Although estimates suggest that US oil production may reach an average of 12.8 million barrels per day in 2023, analysts doubt if shale gains can be sustained without a substantial increase in drilling activity. This uncertainty in production levels has driven US oil prices for near-term delivery higher than futures prices, prompting withdrawals from inventory.
To make storing crude oil profitable, future prices must trade at least 50 cents above current prices. However, the new normal for inventory levels is expected to be lower, according to analysts. Energy Aspects analysts have even suggested that “we are likely moving to a new normal of lower inventory forward cover.”
As the global demand for oil continues its upward trajectory, the dwindling US crude oil stocks have caused concerns about future supply and its impact on oil prices. With the current trends projected to persist until 2024, it remains to be seen how the industry will cope with the growing demand and limited supplies.
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