Guotai Haitong: Crude oil in Q3 is still in a destocking situation, oil prices have the potential for a rebound.

Guotai Haitong released a research report stating that with supply recovery and full pricing, after a rapid drop in oil prices, maintaining destocking in Q3 will be easy to rise and difficult to fall. The rebound is driven by: (1) market expectations for resumption of flights with sufficient trading, if supply recovery progress falls short of expectations, it could easily drive the rebound; (2) time needed for ship owners to reallocate capacity and upstream oil field production to recover; (3) traditional peak demand season arriving with low petroleum product inventories in many regions; (4) changes in previous buffer measures, including IEA inventory releases nearing completion, and an increase in China's crude oil imports returning to normal levels. With oil prices falling, recommended cost and demand-side pressures easing, the outlook is expected to improve for leading companies in the polyester and petrochemical industry. Guotai Haitong's main points are as follows: Supply side: Q3 supply forecast raised According to forecasts from the IEA and EIA, global crude oil total supply in 2026 is expected to be 102.6 and 101.9 million barrels per day, respectively, a year-on-year decrease of -3.7 and -4.2 million barrels per day, with adjustments of +0.1 and +2.9 million barrels per day compared to the previous month's forecast. OPEC+'s June 2026 production levels rebounded, and the deviation from target production levels narrowed. Changes in OPEC production levels mainly came from the UAE, Kuwait, Iraq, with month-on-month increases of +1642, +879, +445 thousand barrels per day, respectively. In June 2026, the number of drilling rigs in the United States increased, and crude oil production rose. Demand side: Three major institutions have differing demand forecasts, with IEA and EIA forecasting a decline in 2026 demand, while OPEC forecasts growth According to forecasts from the IEA, EIA, and OPEC, global crude oil total demand in 2026 is expected to be 103.5, 102.8, and 106.0 million barrels per day, a year-on-year decrease of -1.0, -1.2, +0.8 million barrels per day, with adjustments of +0.2, -0.1, and -0.2 million barrels per day compared to the previous month's forecast. According to the IEA, global LPG, ethane, naphtha, gasoline, kerosene, diesel, and fuel oil demand increased by +44, +31, -13, +39, -44, -4 thousand barrels per day compared to last month. Inventory side: Maintaining destocking in Q3, accumulating inventory in Q4, reduced destocking efforts in Q3 and for the full year Global crude oil total inventories are in the neutral range compared to the same period in the past six years, with accumulated inventories of 4.5 million barrels in June, including a decrease of 39.5 million barrels in floating storage and 83.9 million barrels destocked from inland inventories, destocking was quick reaching near six-year lows compared to the same period. It is expected that destocking will continue in 2026, with the IEA and EIA forecasting a reduced destocking magnitude. The IEA and EIA forecast that global crude oil supply will be generally tight in 2026, with a balance of supply and demand of -0.9 and -0.9 million barrels per day for the year, with deficits of -0.02 and -2.97 million barrels per day, respectively. The forecasted supply and demand balance for the global crude oil market from Q2 to Q4 2026 is -2.9, -0.9, +0.8 million barrels/day and -5.1, +2.2, +2.7 million barrels/day. The IEA and EIA predict that deficits will narrow in Q2-Q3. Risk factors: Significant fluctuations in oil prices; changes in OPEC+ production policies; rapid increase in production from non-OPEC+ oil-producing countries; global economic slowdown and decline in oil demand; changes in geopolitical situations, etc.