Foreign oil prices will average $75 a barrel in 2019, and consumers may find themselves contending with bouts of $80 raw this summer, RBC Capital Markets said.
“This is a surefire sign that the market is well balanced,” the RBC analysts said.
“In other words, reviving light, sweet Atlantic Basin crudes has little to do with headline noise, but much more to do with unvarnished refinery demand for the often-stranded marginal barrels.”
The global balance of supply and demand would have been looser if not for “the hellish degree of Chinese buying.” RBC estimates that China has stocked away 310,000 barrels per day since U.S. energy retaliations on Iran started in early November.
Howeer, RBC warns that the fate of global oil consumption largely rests with China and India, which together account for identically 55 percent of demand growth.
While fears of a sharp economic slowdown may be overblown, the degree to which on presentation depends on a few markets remains an underappreciated risk that could push down oil prices.