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First Look - Oil rises but long-term outlook dims with OPEC demand cuts

WTI was up 88c to $62.38/Bbl on Monday morning (7:45 AM CT)
- Chinese oil demand climbed to 12.1 MMBbl/d in March, the highest since August 2023, driven by stronger Iranian imports, according to Reuters
- Simultaneously, the US held indirect talks with Iran in Oman over the weekend, signaling renewed efforts to resolve the nuclear standoff
OPEC trimmed its global demand growth forecasts for 2025 and 2026 by 100 MBbl/d, projecting annual growth of 1.3 MMBbl/d (~1%)
- Despite the cut, OPEC’s estimates remain notably higher than others in the market
- The EIA lowered its 2025 forecast by 400 MBbl/d last week, a 30% downgrade, to just 900 MBbl/d
Goldman Sachs warns of mounting surpluses through 2026 (BBG)
- Analysts see a global crude glut of 800 MBbl/d in 2025, widening to 1.4 MMBbl/d in 2026
- “While the market has already priced in some future inventory builds, we expect large surpluses in 2025 and 2026 to further weigh on prices,” said Dean Struyven
- Goldman projects Brent to average $63/Bbl through year-end under a base case scenario assuming no recession and only modest OPEC+ supply increases
- Demand growth for 2024 is expected to slow to just 300 MBbl/d, with the steepest declines seen in petrochemical feedstock consumption

Natural gas is trading higher, reversing some of last weeks losses
- Last week, prompt month prices fell 28c, with prices down more than 50c over the past two weeks
- Speculators cut natural gas net-long positions to a 14-week low (BBG)
  - Managed money participants cut positioning to the least bullish level in 14 weeks, driven by a reduction in long positions
Coal consumption rebounds on higher gas prices (BBG)
- Coal-fired power generation increased 23% in the first quarter of the year compared to prior year levels, driven by gas-to-coal switching
- Bloomberg expects coal power in the US to increase by the most since the 2020-2021 period
- In the long term, coal is expected to struggle to compete with natural gas and renewables
- Over the past few weeks, gas prices for this summer have declined, potentially suggesting less gas-to-coal switching during the peak power generation season