Oil Daily | U.S. Crude Inventories Rise, EIA Raises 2024 Demand Forecast Amid Global Tensions and Strategic Moves

【Global Oil Supply and Demand】

Crude oil inventories in the United States rose this week by 180,000 barrels, according to the American Petroleum Institute (API), after analysts predicted an 850,000 barrel build. This week's increase halts five weeks of inventory draws, which previously saw a total loss of 24 million barrels. The Department of Energy (DoE) also reported an increase in Strategic Petroleum Reserve (SPR) inventories by 0.7 million barrels.

The U.S. Energy Information Administration (EIA) has raised its forecast for U.S. crude oil demand, now seeing petroleum and other liquid fuels consumption averaging 20.5 million barrels per day in 2024. However, the EIA revised its global fuels consumption for 2025 slightly downward. Despite lowering its price outlook, the EIA expects crude oil prices to rise in the latter part of 2024.

【Oil-Producing Countries Dynamics】

Iran has vowed to retaliate for the suspected assassination of a Hamas leader by Israel on Iranian soil, heightening tensions in the Middle East. A rocket attack on Al Asad airbase in Iraq wounded at least five U.S. military personnel. The U.S. Department of Defense blamed Iran-aligned militias for the attack, marking a dangerous escalation in the region.

【Latest Oil Policies】

The U.S. Department of Energy (DOE) is continuing efforts to bolster the depleted Strategic Petroleum Reserve (SPR) by announcing a call for bids to supply up to 1.5 million barrels of oil to the Bayou Choctaw site in January 2025, and another 2 million barrels to the Bryan Mound site. This is part of a strategic plan to replenish the SPR while taking advantage of favorable oil prices.

【Industry News】

The U.S. Department of Energy is allocating $2.2 billion in grants for grid upgrades to make it more resilient to extreme weather events and accommodate more renewable energy. The funding is expected to support the construction of over 600 miles of new transmission lines and upgrades to about 400 miles of existing lines.

Brazilian state-owned Petrobras and Colombia’s Ecopetrol have confirmed a natural gas discovery at the Uchuva-2 well off Colombia's coast. This discovery adds to the potential for significant gas development in the region, with a ready market projected for gas imports to soar in the coming years.

U.S. NextDecade Corporation has awarded a $4.3-billion engineering, procurement, and construction (EPC) contract to Bechtel Energy Inc for the fourth train of the Rio Grande LNG export project in Texas. The project aims for a positive Final Investment Decision in the second half of 2024, subject to commercial support and financing.

【Company News】

Suncor Energy reported a net profit of C$1.57 billion for the second quarter, driven by stronger production and higher oil prices. The company’s production averaged 771,000 barrels daily during the reporting quarter. Suncor plans no changes to its original production forecasts for the rest of the year.

U.S. utility Duke Energy reported adjusted earnings per share (EPS) of $1.18 for the second quarter of 2024, surpassing analyst estimates. The higher results were driven by rate increases, higher sales volumes, and improved weather. The company reaffirmed its 2024 adjusted EPS guidance range and its long-term growth rate.

Marathon Petroleum beat analyst estimates for the second quarter with an adjusted net income of $1.4 billion. Despite weaker refining margins, higher processing volumes and strong midstream performance helped the company exceed expectations. Marathon's refining and marketing margin was $17.37 per barrel for the quarter.

Saudi Aramco reported a net income of $29 billion for the second quarter, slightly lower than the previous year. Despite a decrease in free cash flow, dividends paid increased significantly. The company aims to boost gas production and sales by 60% by 2030 from 2021 levels.

【Others】

Goldman Sachs expects a $75 per barrel floor under Brent Crude prices due to macroeconomic fears and limited recession risks. Despite recent slumps in oil prices, the bank maintains that oil prices will find support due to strong demand in the West and India and low speculative trader positioning.