Where does Europe stand in the recovery race?
On the 21st October, our new Chief Economist, David Wech, and Lead Analyst, Jay Maroo, discussed the latest market insights derived from oil & gas flows.
As oil and gas markets continue to strive to regain stability in a near post-pandemic world, where does Europe stand in the global recovery race? With tightening crude markets, supply issues driving energy prices higher and a likely recovery on the demand side, there are many vital questions to answer in this age of turbulence.
Core takeaways from the session:
- Fundamentals point to a substantial tightening of crude and product markets from here onwards
- An increase of requirements by up to 5mbd vs delivered supply over Q3 is possible in the coming months
- The unsustainability of Q3 stock draws, seasonal peak demand, the continued recovery from Covid, and additional power generation requirements are the key drivers
- Our flow data see increased exports materialising in crude, LNG, and transportation fuels, as the first reaction to pricing signals
- But the competition between East and West of Suez markets is heating up, with more Asian countries relaxing Covid measures
- To meet peak product demand still higher margins may be required to lure sufficient refiners back into the market and/or to maximise operation rates while coping with soaring energy costs.