APPEC-Weak Oil Demand Affects Singapore Industry Gathering
Next week, the largest gathering of energy traders in Asia will be dominated by discussions about the weak demand for oil in Asia and China as well as the plans of OPEC+ producers in order to reduce supply.
APPEC 2024 is organised by S&P Global Commodity Insights and will begin on Monday, in Singapore. More than 1,000 participants are expected to attend from more than 50 countries. They will discuss the outlook of oil and gas demand, supply and prices.
The event takes place despite falling oil prices and fears of tensions escalating in the Middle East. Worries about slowing economic growth globally and oil demand by the two largest consumers of oil in the world - China, and the U.S. - are also weighing on the minds of the participants.
The margins of Asian refiners fell to their lowest levels for the season since 2020 this week as diesel and gasoline supplies rose following the end of peak summer travel. This led to expectations of run-cuts in Asia.
Amrita Sen is the founder and director for research at Energy Aspects.
China is going to be the focus of attention.
Brent crude futures fell to $70 a bar this week despite production interruptions in Libya and a delay of two months by OPEC+ before they began unwinding their supply cuts.
"Right Now, 2025 supply growth outside OPEC+ is equal to demand growth." There is no way to reverse the cuts without flipping this market into a surplus," Saul Kavonic says, an analyst for MST Marquee.
This also means that if the demand continues to weaken, OPEC+ will need to further reduce their already record-low production targets.
Analysts say that the upcoming U.S. elections will be a major topic at APPEC.
"I believe it's widely acknowledged that Trump will be more bearish on oil. Let's not forget that he will be more hawkish against Iran," said Warren Patterson.
The possibility of stricter sanctions (on Iran) is a real possibility. This could have a major impact on the outcome of next year.
Energy Aspect Sen stated that traders were surprised by the strength of Brent and U.S. West Texas Intermediate benchmarks compared to Middle East's Dubai.
She added, "This year Eastern traders haven’t made any money. I think it's going be an interesting one." (Reporting and editing by Tony Munroe, David Evans and Florence Tan)
(source: Reuters)
