Author: Robert Boslego

World Oil Supply And Price Outlook, December 2019

Posted on by Robert Boslego

The Energy Information Administration released its Short-Term Energy Outlook for December, and it shows that OECD oil inventories likely bottomed last June 2018 at 2.800 billion barrels. It estimated stocks were unchanged in November at 2.950 billion, 103 million barrels higher than a year ago.

For the balance of 2019, OECD inventories are projected to drop to 2.932 billion, 72 million higher than end-2018. For 2020, EIA projects that stocks will build by 39 million barrels to end the year at 2.979 billion.

Oil

The EIA estimated that OPEC production dipped by 80,000 b/d in November to 29.52 million. For 2020, it estimates that OPEC production will average about 29.3 million, about 500,000 b/d lower than in 2019. Continue reading "World Oil Supply And Price Outlook, December 2019" →

Large Gain For U.S. Crude Production In September

Posted on by Robert Boslego

The large gain in U.S. crude production in September was masked by a temporary GOM decline.

The Energy Information Administration reported that September crude oil production averaged 12.463 million barrels per day (mmbd), up 66,000 b/d from August. In addition, the August estimate was revised 33,000 b/d higher.

Texas production reached a new high of 5.227 mmbd, up 72,000 b/d from August. Other gains were 67,000 b/d in Alaska, 43,000 b/d in Oklahoma, and 21,000 b/d in New Mexico. The rebound in Alaska was due to seasonal factors. There was a 114,000 b/d drop in the Gulf of Mexico, probably due to maintenance reasons. Without that drop, the total gain would have been 180,000 b/d, a very respectable gain on top of the huge gain in August.

Plains All American Pipeline LP’s (PAA) Cactus ll pipeline was expected to ship at full capacity, 670,000 b/d, in September. EPIC Midstream’s crude oil pipeline began shipping 400,000 b/d. It is designed to ship 440,000 b/d from the Permian and another 150,000 b/d from the Eagle Ford.

Phillips 66 Partner’s Gray Oak pipeline is expected to ship an additional 900,000 b/d. It is scheduled to being shipments by year-end.

Crude
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Oil Outlook For 2020 Appears Challenging For Saudi Aramco

Posted on by Robert Boslego

The OPEC ministers are scheduled to meet December 5th in Geneva. Their non-OPEC partners will join them December 6th. As of this writing, reports are that Russia and Saudi Arabia are not yet pushing for deeper cuts in 2020 are likely to call for full compliance by all OPEC+ participants and extend the existing quotas scheduled to end in March through June.

However, developments in non-OPEC countries may require deeper cuts to prevent glut conditions. And a couple of surprises within OPEC may doom the group’s efforts. Saudi Aramco is promising a dividend payment to IPO shareholders in proportion to a $75 billion dividend for all Aramco shareholders and will pay the new shareholders their due regardless if it is unable to pay the government its share of the dividend in full. Therefore, the Kingdom may be faced with a major financial challenge in 2020.

U.S. Supply

Higher production forecasts for the U.S. are coming under increased scrutiny and are subject to a wide variety of opinions. The base case of the Energy Dept. is a rise of 1.0 million barrels in crude production from 12.29 to 13.29 million barrels per day. It also projects an increase of 680,000 barrels per day in petroleum liquids, mainly NGLs.

oil

The International Energy Agency (IEA) is projecting a US increase in crude production of 1.2 million. But Goldman Sachs revised its forecast down to 600,000 b/d. And HIS Markit is even lower at 440,000 b/d. Continue reading "Oil Outlook For 2020 Appears Challenging For Saudi Aramco" →

World Oil Supply And Price Outlook, November 2019

Posted on by Robert Boslego

The Energy Information Administration released its Short-Term Energy Outlook for November, and it shows that OECD oil inventories likely bottomed last June 2018 at 2.794 billion barrels. It estimated stocks rose by 1 million barrels in October to 2.909 billion, 69 million barrels higher than a year ago.

For the balance of 2019, OECD inventories are projected to stabilize at 2.900 billion, 55 million higher than end-2018. For 2020, EIA projects that stocks will build by 59 million barrels to end the year at 2.959 billion.

Oil

The EIA estimated that OPEC production rose by 1.325 million barrels per day in October, 1.3 of which was in Saudi Arabia due to the recovery from the attack on its oil facilities. It is estimating that OPEC production averaged about 29.52 million in October. For 2020, it estimates that OPEC production will average about 29.52 million, about 160,000 b/d above the call (demand) for OPEC oil in 2020. Continue reading "World Oil Supply And Price Outlook, November 2019" →

U.S. Crude Production Surged In August

Posted on by Robert Boslego

The Energy Information Administration reported that August crude oil production averaged 12.365 million barrels per day (mmbd), up 599,000 b/d from July. The gain was primarily due to the fact that July production had dropped due to Tropical Storm Barry, which shut-in 9.2 million barrels, or 297,000 b/d for the month, based on real-time estimates. In addition, July production was revised downward by 40,000 b/d. Nevertheless, the net increase of around 250,000 b/d from the adjusted July figure was a large increase and confirms the EIA’s weekly estimates for the month.

Production in the Gulf of Mexico reached a new high at 2.006 mmbd. The previous record was 1.979 mmbd in April. Texas production also reached a new high of 5.121 mmbd, up 98,000 b/d from July. Other gains were 43,000 b/d in New Mexico, 28,000 b/d in North Dakota, 15,000 b/d in Louisiana and 12,000 b/d in Colorado. Alaska was down 66,000 b/d for seasonal reasons, and that production is likely to return.

Plains All American Pipeline LP’s (PAA) Cactus ll pipeline was expected to ship 300,000 b/d in August and to be at full capacity, 670,000 b/d, in September. EPIC Midstream’s crude oil pipeline began shipping 400,000 b/d. It is designed to ship 440,000 b/d from the Permian and another 150,000 b/d from the Eagle Ford.

Phillips 66 Partner’s Gray Oak pipeline is expected to ship an additional 900,000 b/d. It is scheduled to being shipments by year-end.

The effect of the pipeline additions will narrow the spread between Midland and the U.S. gulf prices, effectively lowering breakeven costs in the Permian.

Crude Production
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