1. Recession Worries Wipe Out Most of OPEC+ Upside
- Oil prices have been sliding for most of this week as weakening US labor market data play into wider fears of an oil demand slowdown in the US, aggravated by what many believe to be a technical gap-fill correction.
- With WTI trading around $77 per barrel, it is truly a sign of times that there was no mid-week increase following a 4.5 MMbbls build in US crude inventories and a 1.5 p.p. rise in refinery utilization, as slowing gasoline demand grabbed most of the attention.
- Whilst shrinking oil stocks and OPEC+ production cuts are still offsetting some of the downside pressure, the heyday of profitability seems to be over for now, even in Asia refining margins are at the lowest since October 2022.
- Apart from shrinking inventories, positioning would indicate further upside to prices as net length in the WTI futures contract from hedge funds and money managers rose to the highest since early November 2022 (+198.5 million barrels equivalent).
2. Tourism Renaissance Boosts China’s Jet Fuel Demand
- China’s opening after three years of shut borders and little to no international flights is finally materializing, with the upcoming May Day holiday seeing a 157% increase in bookings compared to April.
- Despite re-emerging flights to countries most dependent on Chinese tourism such as Thailand or Vietnam, the number of tourists traveling is still only 10% of same-month…