Citigroup analysts on Thursday called Brent crude's brief trip this month above $90/bbl a "bullish knee-jerk price action."

The price jump, which was fueled by concerns over a potential widening of the Mideast conflict, was short-lived and Brent prices have eased on expectations that calibrated strikes by Iran and Israel likely will not lead to a major escalation.

The Citi team said it remains bearish on crude market fundamentals, adding that visible global oil stock builds in the first quarter showed supply outpacing demand by about 1 million b/d, with that trend continuing into April.

The bank's analysis said global commercial crude inventory builds in key trading hubs are up by 25.8 million bbl so far this year, boosting stocks to 582.1 million bbl.

While Citi acknowledged that refined products inventories have fallen, it raised concerns about weak gasoline demand. The four-week moving average for U.S. gasoline demand is 8.7 million b/d, leaving it nearly below the same period of 2022 when significant demand destruction was occurring.

Citi suggested that this time of year should see a "decent growth trend, " adding that gasoline demand in the most recently ended week, excluding the pandemic years, was the lowest April reading since 2014.

The bank said it expects an average Brent price of about $86/bbl in the second quarter with "loosening fundamentals" eventually pressuring prices lower.

Citi's analysis downplayed any impact from tougher U.S. sanctions on Iran or Venezuela and said the Biden administration doesn't want to tighten the oil market in an election year.

The bank did hint at a possible turnaround for diesel prices, saying European imports this month rose to the highest level since July and suggested prices may soon find a bottom.


This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.


--Reporting by Tom Kloza, tkloza@opisnet.com; Editing by Jeff Barber, jbarber@opisnet.com


(END) Dow Jones Newswires

04-25-24 1122ET