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OPEC likely to tip oil market into deficit early next year OPEC kept output slightly below its quota in November. We expect that OPEC will produce within its new quota until it expires in March 2020, but that Saudi Arabia will do most of the heavy lifting …
11th December 2019
Overview – Warmer-than-expected weather, amid subdued global economic growth, put downward pressure on the prices of coal and LNG since the start of November. In contrast, the price of oil rose on the back of the agreement that OPEC+ will cut output …
9th December 2019
Today, OPEC+ announced that it will deepen its oil output cut by 0.5m bpd to 1.7m. More surprising, is that it looks as though Saudi Arabia will cut supply by a further 167,000, despite the fact that it is already producing well below quota . This could …
6th December 2019
There has been mounting speculation that OPEC+ is set to agree deeper cuts at its upcoming meeting. However, we still think Saudi Arabia’s concerns about its loss of market share, and little appetite for increased cuts in Russia, will win the day. …
4th December 2019
Surprise drawdown a false dawn US crude stocks fell last week on the back of increased refinery throughput. However, with stocks well above their historical average, and with the US economy set to slow, this latest report doesn’t alter our view that US …
Crude stocks will continue to climb US commercial crude stocks rose last week, largely on the back of an outflow from the government’s strategic reserve. Over the coming months, we expect slowing economic growth and faltering crude demand to lead to …
27th November 2019
Since the imposition of US sanctions in May 2018, Iranian oil production has fallen by nearly 45%. For our part, we think that output would recover quickly if sanctions were lifted. Moreover, we see little risk of Iran’s oil industry suffering the same …
OPEC+ has complied with its output quota so far … … but there is a high chance that it won’t comply in the coming months We think that this makes deeper output cuts less likely There is a high risk that a ramp-up in production in Russia pushes OPEC+ …
25th November 2019
SPR release prevents a drawdown US commercial crude stocks rose, in large part due to a significant outflow from the strategic reserve. That said, we expect stocks to remain relatively high as the economy slows and demand falters . The EIA’s weekly US …
20th November 2019
OPEC turns a bit more positive on 2020 OPEC’s November Report, and recent comments by the organisation’s secretary general, suggest OPEC is becoming more optimistic about the prospects for demand for its crude in 2020. This may be an indication that …
14th November 2019
Higher production boosts crude stocks US commercial crude stocks rose, in part owing to higher domestic production but there was also a significant outflow from the strategic reserve. We think that above-trend US stocks will remain a factor weighing on …
Palm oil prices have soared recently in part because of unfavourable weather, which has clouded the outlook for supply. At the same time, we think that demand from the world’s top consumers is set to rise strongly. As a result, we expect prices to …
13th November 2019
Despite steadily rising supply, strong demand growth and expanding export opportunities should ensure that the average price of US natural gas (Henry Hub) will be higher in 2020 than 2019 . The year-to-date average Henry Hub price is 14% lower than in …
8th November 2019
We think that the forthcoming Saudi Aramco IPO is unlikely to have much of an impact on Saudi Arabia’s oil policy or on global oil prices either now, or in the future. Instead, Saudi output in the coming decades is likely to be dictated by a need to sell …
7th November 2019
US commercial stocks to increase US commercial crude stocks rose on the back of higher net imports and a fall in inputs to refineries. We expect a slowdown in the US economy to lead to further builds in inventories in the coming weeks . The EIA’s weekly …
6th November 2019
Overview – Despite signs that the global economy continued to slow in October, only coal prices fell. While we expect global growth to remain subdued in the year ahead, we think that a recession will be avoided, which underpins our forecast of somewhat …
5th November 2019
The September attacks on oil facilities in Saudi Arabia re-ignited discussion of the “risk premium” in the oil price. Since the risk premium is not directly observable, we have created a methodology to estimate it indirectly . Our model found that, based …
31st October 2019
Strong gasoline demand, for now US commercial crude stocks surged last week owing to a jump in net imports. Over the coming months, we expect a slowdown in the US economy to lead to further builds in inventories . The EIA’s weekly US Petroleum Report, …
30th October 2019
Recent construction delays to Nordstream 2 mean that the Russia-EU gas pipeline is likely to miss its scheduled completion date of December 2019. While we suspect that surging supplies of LNG from the US and Australia would limit any short-term price …
25th October 2019
Surprise drawdown is cold comfort US crude stocks fell last week on the back of strong demand for both distillates and gasoline. But with stocks still comfortably above the five-year average, and the US economy set to slow further, this reading doesn’t …
23rd October 2019
Overview – Oil prices are likely to remain subdued in the near term as the global economy continues to slow and risk aversion prevails. And while natural gas and coal prices could rise in the coming months as part of the usual season upturn in demand, the …
Strong distillate demand is here to stay US crude stocks surged last week in part because of a decline in refinery throughput. We expect further builds in stocks over the next few months as the US economy slows, which will curb gasoline demand . The EIA’s …
17th October 2019
Subdued global economic activity will weigh on oil demand next year. That said, we expect GDP growth to gradually pick up over the course of the year, and new International Maritime Organization rules (IMO 2020) to boost crude demand from the shipping …
16th October 2019
Low production still not enough to lift prices OPEC’s September production data were distorted by the attacks on Saudi oil facilities, but overall output remained subdued. Deeper supply cuts are likely to be discussed at OPEC’s December meeting, but we …
10th October 2019
Crude stocks are on a rising trend US crude stocks rose again last week and we suspect that they will increase further owing to ongoing refinery maintenance and the prospect of lower product demand as the US economy slows . The EIA’s weekly US Petroleum …
9th October 2019
We expect that global oil supply will remain constrained in 2020. But we also forecast somewhat stronger growth in demand next year and a pick-up in risk appetite on the back of monetary easing. As a result, we are raising our forecast of the price of …
Overview – Energy prices diverged in September. There were strong gains in European gas and coal prices in part owing to strikes at France’s utilities at a time when seasonal demand is also picking up. Meanwhile, oil prices have been falling amid fears …
3rd October 2019
Crude stocks to continue rising as the US economy slows US crude stocks increased last week as inputs to refineries fell. We expect crude stocks to continue to rise in the coming months as a weaker US economy leads to softer growth in gasoline demand . …
2nd October 2019
Fall in US crude exports may prove temporary US crude stocks rose on the back of higher US production and a fall in crude inputs to refineries. Stocks could ease back again in the month ahead if the loss of Saudi oil lifts demand for US crude exports . …
25th September 2019
Lower production in Saudi Arabia and the lower-than-expected US output growth have led us to revise down our global oil supply growth estimates. We now expect the market surplus to be smaller than we had previously expected in 2020, which will support …
23rd September 2019
War with the US would cause a collapse in Iran’s economy that would directly knock around 0.3%-pts off global GDP – equal to the damage from the US-China trade war so far. More important to the rest of the world, though, would be the resulting surge in …
20th September 2019
US production of light crude oil will continue to grow in the coming years, and we expect that this will lead to the US becoming a net exporter of crude oil by 2021 . US oil production has grown sharply from 5.5m bpd in 2010 to 12.4m bpd currently, owing …
19th September 2019
Weaker refinery activity to boost stocks US crude stocks rose last week largely owing to a decline in refinery inputs. Relatively high stocks will continue to reassure the market that there are ample supplies to cover outages in Saudi Arabia . The EIA’s …
18th September 2019
Given the uncertainty about the impact on supply of this weekend’s attack on Saudi Aramco, we are not changing our oil price forecasts yet. However, in this Update , we outline three possible scenarios that could develop and what they would mean for …
16th September 2019
US product demand appears to be losing steam Another sharp fall in US stocks suggests crude demand is holding up well, despite some signs of deterioration in economic activity data. However, we suspect that crude stocks will soon start to build as …
11th September 2019
Saudi Arabia likely to keep oil output low OPEC kept output below quota in August. We think that it will continue to under-produce in 2020, particularly as the Saudi Aramco IPO nears, and that this will be one factor supporting prices . The OPEC Monthly …
The usual seasonal uplift in demand should support the price of Pacific coal until end-2019. However, we expect average prices to fall in the years ahead owing in large part to weaker demand prospects . The price of Pacific coal has tumbled over the past …
10th September 2019
Oil & Gasoline – Oil prices continued to fall last month on concerns about a slowing global economy and rising US-China protectionism. Our forecast of a further downturn in global growth suggests prices could fall by more. That said, supply is …
6th September 2019
US commercial crude stocks slump again, but not for much longer! US commercial crude stocks plunged again last week as net imports surged. Looking ahead, we expect higher US oil production and refineries going into scheduled maintenance to lead to …
5th September 2019
The policies of the next European Commission are likely to speed up the EU’s ongoing transition towards a greener energy future. However, its impact will probably not live up to expectations . President-elect of the European Commission, Ursula von der …
29th August 2019
Whopping drawdown lifts some demand gloom The huge weekly drawdown in US crude stocks clearly soothed some of the near-term fears surrounding softer demand, as evidenced by today’s gain in prices. But our forecast for a slowdown in the US economy suggests …
28th August 2019
While the US-China trade war has escalated, we had already expected the two countries’ dispute to deepen. Meanwhile, although a thawing of US-Iran relations could mean a return to the market of Iranian exports, this seems a long way off. As such, we see …
27th August 2019
A no deal Brexit later this year could mean that the UK government decides to substantially reduce its strategic reserves of petroleum products. But even after a reduction, the UK’s reserves should remain ample. What’s more, any sell-off in product stocks …
23rd August 2019
US petroleum demand shows few signs of slowing While most of last week’s draw in US commercial crude stocks was down to a drop in net imports, the latest figures showed another strong week for both inputs to refineries and gasoline demand. But looking …
21st August 2019
The dramatic narrowing of the spread between the prices of Brent and WTI oil in the last month, reflects a structural change in the market as logistical bottlenecks in the US are being resolved. As such, we expect the Brent-WTI spread to trade in a much …
20th August 2019
The hurdle to further production cuts is high While another cut in Saudi Arabian oil output pushed OPEC production further below its quota in July, we doubt that the Kingdom is on the cusp of taking larger action in order to support oil prices . The OPEC …
16th August 2019
Another surprise build for crude stocks Lower demand from refineries is the primary reason for another unexpected rise in commercial crude stocks. This exaggerated today’s fall in prices, which had already been dragged down by weak economic data. Looking …
14th August 2019
The raft of liquefied natural gas (LNG) projects in the works suggests that the downward pressure on prices from surging global supply will continue this year and next. But with demand growth set to remain healthy, and the stream of new projects likely to …
13th August 2019
We estimate that the new IMO rules will boost crude demand by 0.9m bpd in 2020 But overall growth in demand will remain subdued … constrained by weak global economic activity and sluggish growth in world trade The International Maritime Organization (IMO) …
8th August 2019
The turning point looms for US crude stocks While much of last week’s decline in commercial crude stocks is down to the EIA’s opaque adjustment factor, the latest stocks report nonetheless paints a fairly weak picture of US demand. Given our view that the …
7th August 2019