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Summer oil rally possible but market may look past it: Macquarie

Macquarie analysts acknowledge the possibility of a summer crude oil rally but caution that the market might not be swayed in a note Friday.

They maintain a structurally bearish view of crude oil prices despite potential short-term upward pressure.

“[A] summer rally [is] possible, but [the] market may look past it, and draws could disappoint,” Macquarie states. The firm highlights surplus concerns in the second half of 2024 and throughout 2025, which could lead to a significant price correction.

While acknowledging geopolitical risks and potential for a hot summer boosting demand, Macquarie identifies several negative drivers. They express concern about OPEC+ compliance with production quotas, particularly in the context of US election year dynamics. Additionally, they foresee continued growth in non-OPEC oil production, including from the United States, potentially dampening prices.

Macquarie also tempers enthusiasm for potential production increases from new sources like the Dangote Refinery and Dos Bocas facilities, suggesting their ramp-up might be slower than anticipated. Finally, the report suggests China’s oil demand, particularly for diesel, is becoming less sensitive to economic growth, further limiting upside potential.

Overall, Macquarie’s analysis suggests a cautious approach to the possibility of a summer oil rally. They believe structural factors could lead to a price correction despite potential short-term upward pressure.


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