Cathay Pacific Haitong: Crude oil Q3 is still going to go to storage, and oil prices have momentum to rebound

The Zhitong Finance App learned that Cathay Pacific Haitong released a research report saying that after supply recovery and pricing was sufficient, and oil prices fell rapidly, it was easy to rise and not fall when it went back to storage in Q3. The rebound was driven by: (1) the market's expected transactions for the resumption of flights were sufficient. If the supply recovery process falls short of expectations, it is easy to drive a rebound; (2) shipowners' capacity allocation and upstream oil field production will take time; (3) the traditional peak demand season has arrived and refined oil stocks are low in many places; (4) early buffer measures may have changed, including the release of IEA inventories nearing its end and the increase in China's crude oil imports returning to normal volume. Leaders in the polyester industry and refining and chemical leaders are expected to improve as oil prices fall, recommendation costs and demand-side pressure ease.

Cathay Pacific Haitong's main views are as follows:

Supply side: Q3 supply forecast increased

According to IEA and EIA forecasts, the total global crude oil supply in 2026 was 102.6 and 101.9 million b/d, respectively, -3.7 and -4.2 million b/d, respectively. Compared with the previous month's forecast adjustments of +0.1 and +2.9 million b/d, respectively. OPEC+ production rebounded month-on-month in June 2026, and production deviated from target shrank. Changes in OPEC production mainly come from the UAE, Kuwait, Iraq, etc., compared to +1642, +879, and +445 thousand b/d, respectively. In June 2026, the number of drilling rigs in the US increased, and crude oil production increased.

Demand side: The three major institutions anticipate differences in demand forecasts. The IEA and EIA expect demand to decline in 2026, and OPEC is expected to maintain growth

According to IEA, EIA, and OPEC forecasts, total global crude oil demand in 2026 was 103.5, 102.8, and 106.0 million b/d, respectively, and -1.0, -1.2, and +0.8 million b/d year-on-year, respectively. Compared with the previous month's forecast adjustments of +0.2, -0.1, and -0.2 million b/d, respectively. According to the IEA, global demand for LPG, ethane, naphtha, gasoline, kerosene, diesel, and fuel oil was adjusted by +44, +31, -13, +39, -44, and -4 thousand barrels/day, respectively, compared to the previous month.

Inventory side: Q3 maintains storage, Q4 accumulates storage, Q3 and annual storage intensity is reduced

Total global crude oil reserves were within the neutral range for the same period of the past six years, with a cumulative total of 4.5 million barrels in June, of which floating silos were reduced by 39.5 million barrels, and global land stocks were eliminated by 83.9 million barrels. The storage rate was relatively fast, and land stocks were removed to a low level in the same period of the past six years. It is expected to be removed in 2026, and the IEA and EIA predict a reduction in the amount of storage. The IEA and EIA expect global crude oil supply to be tight overall in 2026, with annual supply and demand balances of -0.9 and -0.9 million b/d, with gaps of -0.02 and -2.97 million b/d, respectively. The balance between supply and demand in the 26Q2-26Q4 global crude oil market is expected to be -2.9, -0.9, +0.8 million b/d, and -5.1, +2.2, and +2.7 million b/d, respectively. The IEA and EIA forecast a narrowing of the Q2-Q3 gap.

Risk warning: large fluctuations in crude oil prices; changes in OPEC+ production policies; excessive production growth in non-OPEC+ oil producers; global economic growth is slowing down, crude oil demand is declining; changes in the geographical situation, etc.