Global oil inventories are crashing and approaching an eight-year low, with the rate of depletion so fast that it exposes the market to further shocks, according to Goldman Sachs.
Total oil stocks globally have dropped to about 101 days of expected demand, the lowest level in nearly eight years, analysts at Goldman Sachs said in a note carried by Reuters.
With the Strait of Hormuz inaccessible for nearly all tanker traffic, these stocks could drop to as low as 98 days of demand by the end of May, Goldman’s analysts warned.
While the global oil inventories are not expected to plunge to an all-time low, the speed at which the stocks and supply buffers are depleting is a concern for the markets, according to the investment bank.
While global oil stocks are “unlikely to hit minimum operational levels this summer, the speed of depletion and supply losses in some regions and products is concerning,” the analysts wrote in the note.
The refined product stocks have been depleting even faster, with fuel stocks now down to 45 days of demand, from 50 days of demand before the war in the Middle East began, Goldman Sachs reckons.
Easily accessible buffers of refined products are fast approaching very low levels, according to the bank.
The renewed tensions in the Strait of Hormuz, where the U.S. is attempting to guide vessels out of the chokepoint while Iran targets ships and ports, suggest the hoped-for reopening of the critical oil trade lane is being pushed back again, and the fragile ceasefire is close to a breaking point.
Oil and natural gas prices jumped again on Monday as the market is re-pricing once again the duration of the supply disruptions amid the re-escalation of tensions in the Persian Gulf, ING’s commodities strategists Warren Patterson and Ewa Manthey said in a note on Tuesday.
By Tsvetana Paraskova for Oilprice.com
