Tag: Organization of the Petroleum Exporting Countries (OPEC)

$50 Crude Oil Not Likely To Hold

Posted on by Robert Boslego

Citi is the latest to revise its estimates of the demand destruction from COVID-19. It said that it now believes inventories of crude oil could grow to 2 million barrels per day in February alone, which would put “even more sustained pressure on prices.” A week ago, the firm’s thought the potential build would be over one million barrels per day for the quarter.

Numerous sources have estimated China’s demand for crude had dropped between two and three million barrels per day since petroleum product consumption had dropped, and the profitability of running refineries had plummeted. But Goldman Sachs (GS) subsequently revised its estimate last week, that they now expect “a cumulative global stock build of 180 million barrels in 1H20, four times its pre-virus forecast.”

The Goldman forecast is based in part on an estimated hit in China’s crude oil demand of 4 million barrels per day. Goldman assumes that OPEC+ will deepen its cuts in 2Q by about 500,000 b/d.

OPEC’s Joint Technical Committee (“JTC”) met from February 4 to 6th and recommended “a further adjustment in production until the end of the second quarter of 2020” and “extending the current production adjustments until the end of 2020.” The cut would be an additional 600,000 b/d on top of the cuts announced in December.

But Russian Energy Minister Alexander Novak told reporters: Continue reading "$50 Crude Oil Not Likely To Hold" →

World Oil Supply And Price Outlook, January 2020

Posted on by Robert Boslego

The Energy Information Administration released its Short-Term Energy Outlook for January, and it shows that OECD oil inventories likely bottomed last June 2018 at 2.800 billion barrels. It estimated stocks dipped 1 million barrels in December at 2.914 billion, 54 million barrels higher than a year ago.

For 2020, OECD inventories are projected to build by 47 million barrels to 2.962 billion. This is EIA’s first projection for 2021, and it forecasts that stocks will draw by 17 million barrels to end the year at 2.945 billion.

Oil

The EIA estimated that OPEC production dipped by 250,000 b/d in December to 29.24 million. For 2020, it estimates that OPEC production will average about 29.19 million, about 600,000 b/d lower than in 2019. For 2021, it estimates OPEC production will remain about the same. Continue reading "World Oil Supply And Price Outlook, January 2020" →

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" →

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" →