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Oil giving up gains as demand growth may have peaked for the year, Vitol's Muller says

Highlights

Diesel losing market share to LNG

Dated Brent down to $83.08/b on May 10

Concern over China's growth rates

  • Author
  • Claudia Carpenter
  • Editor
  • Herman Wang
  • Commodity
  • Chemicals Crude Oil LNG NGLs Refined Products Shipping Upstream

Oil prices that have trended lower since mid-April are under pressure because supplies are managing to get to customers despite disruptions in the Gulf of Aden, refinery attacks in Russia and global concerns about fighting in Gaza, Vitol's head of Asia said May 12.

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"None of these events have severely disrupted supply of actual oil flows," Mike Muller said on the Gulf Intelligence daily markets energy podcast. Various analysts have reported a peaking of the year-on-year demand growth projections that are now closer to 1.65 million-1.8 million b/d from earlier projections of 2 million b/d, he said.

The Platts-assessed Dated Brent benchmark oil price was $83.08/b on May 10, down from a recent peak of $93.35/b on April 12, according to S&P Global Commodity Insights data.

"We're through the period of uncertainty which is characterized by refinery turnarounds every springtime and people are doing their forward stock projections, and factoring the latest input on the demand side of the equation where there continues to be concern over Chinese growth rates," Muller said.

Crude demand growth is centered on petrochemicals and natural gas liquids, while diesel is losing ground, he said.

A retreat in diesel demand indicates a slowdown in industry, such as trucking, and is possibly a harbinger of reduced economic growth in the US, Christof Ruhl, senior research scholar at the Center on Global Energy Policy at Columbia University in New York, told the podcast.

Diesel is losing shrinking market share to LNG, including trucking in China and maritime in Singapore through commissioning of dual-fuel ships in containers and dry-bulk shipping, Muller said. "2024 is the year when LNG has finally come into pricing range where it can test market share with diesel," he said.