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OPEC oil production still falling short Although OPEC oil production rose in February, it remained well below target. And while OPEC left its 2022 oil demand and supply forecasts unchanged, it hinted at revisions due to “geopolitical turmoil”. The OPEC …
15th March 2022
Saudi Arabia has so far resisted pressure from the US to raise oil production in order to dampen prices but, with Russian oil production and exports set to be disrupted, we think that a move in this direction is now more likely than not. While the Kingdom …
11th March 2022
Even if the West bans crude imports from Russia entirely, the Iranian experience suggests that there will still be ways for Russia to get its oil onto global markets. But any workarounds would take time to translate into a pick-up in exports, and at best …
Russia’s oil production is set to decline over the course of this year under the weight of Western sanctions, but the scale of the decline will depend on the extent of the sanctions. In this Update , we weigh up how a complete Western ban on imports of …
10th March 2022
Panic buying and flatlining production to send stocks even lower Crude stocks in the US continued to fall last week and are now at a multi-year low for this time of year. The sharp drop in product stocks points to panic buying by consumers, while domestic …
9th March 2022
While the plan to reduce Europe’s reliance on Russian gas this year seems achievable, it will only lock in higher-for-longer gas prices and prolong the squeeze on household incomes. The centrepiece of the European Commission’s “REPowerEU” package, …
We think that a complete ban on Russian energy imports would cause the prices of Brent crude oil and European natural gas to surge to $160pb and €300/MWh in the near term and settle at still very high levels into next year. The Russian economy would …
7th March 2022
US strategic oil reserves to fall further due to IEA-coordinated release US commercial oil stocks fell last week on the back of higher exports, lower imports and greater refinery use of crude oil. Strategic reserves also fell to their lowest since August …
2nd March 2022
As fears over Russian oil supply mount, negotiations between Iran and world powers on reviving the Iran nuclear deal have been advancing in Vienna. If the nuclear deal is revived, we think there will be an immediate increase in Iranian supply, but fears …
Our estimates suggest that risk premiums are currently adding around 40% to commodity prices. This suggests that commodity prices could fall a long way whenever concerns over the Russia-Ukraine conflict begin to ease, though clearly this is unlikely to …
25th February 2022
Rising US crude stocks won’t halt rise in oil prices US crude stocks rose by more than the consensus expected last week, but this was never going to halt the ongoing surge in oil prices. With all eyes now on the potential fallout from a Russian invasion …
24th February 2022
The latest twist in the Russia-Ukraine crisis is likely to keep commodity prices elevated over the coming weeks and months. And if the situation spirals into a more serious and wide-ranging conflict between Russia and the West, commodity prices could rise …
It is not in the economic interests of either Russia or the West to use trade in energy as a weapon against each other, but that is not to say it won’t happen. If energy flows were disrupted, we think oil prices could settle at around $120-140 per barrel, …
22nd February 2022
Oil production in Venezuela has been showing signs of life, and there is probably scope for further gains in the near term. But it would require a lifting of sanctions and significant investment over many years to bring production back to levels seen a …
21st February 2022
After it was slashed in the wake of the pandemic, capital expenditure by US oil producers is now rising. Given oil prices will probably remain high for a while, we suspect the recovery has longer to run. This could give a lift to US oil production this …
18th February 2022
Stocks in Cushing likely to build in the coming weeks Commercial stocks in the US rose last week as refinery inputs fell and net imports increased. However, stocks in the WTI storage hub of Cushing, Oklahoma, dwindled further, causing WTI prices to rise. …
16th February 2022
In this Update , we discuss the possible ramifications for the global oil and natural gas markets of a Russian invasion of Ukraine. Much would depend on whether Western sanctions are placed on Russian energy companies and/or Russia decides to withhold …
Growth in LNG exports, particularly from the US, will put downward pressure on natural gas prices in Asia and Europe. However, it will not be enough to return prices to pre-pandemic levels as stocks are low and demand growth is likely to remain strong, …
11th February 2022
OPEC oil production rises in January, but end-2022 targets look ambitious OPEC raised oil output in January, but the shortfall relative to target grew even larger. We never expected OPEC to manage to completely unwind its production cuts this year, but …
10th February 2022
US demand growth to falter later in the year Crude oil and product stocks fell last week, reflecting robust US demand. However, we think growth in product demand will slow over the course of this year in tandem with slower growth in the US economy . The …
9th February 2022
Product demand could get stronger in near-term Product demand remains very strong for the time of the year and, if gasoline demand mounts a recovery once COVID-19 cases moderate, it could get even stronger. Although, we expect that slowing economic growth …
2nd February 2022
Overview – Energy prices will remain volatile for the next few months, but should fall back later this year as demand drops back and supply picks up. That said, the shortfall of supply over the last year or so means that energy stocks are now extremely …
1st February 2022
Tentative signs of a revival in gasoline demand The surge in oil demand included the first signs of a recovery in transport-related gasoline demand. Although, we doubt demand will remain this buoyant for too long as economic growth is set to slow . The …
26th January 2022
A Russian military invasion of Ukraine would adversely affect the euro-zone economy by further disrupting the market for energy, pushing up inflation and reducing households’ real incomes. However, any economic fallout would probably be fairly small and …
25th January 2022
Oil prices have risen sharply since the start of 2022 and natural gas and coal prices have remained high. We continue to expect energy prices to fall this year, but the latest developments on supply suggest that they will not fall by quite as much as we …
19th January 2022
OPEC under-production likely to continue OPEC continued to raise output by less than its target in December. However, the group is still steadily raising output, which is a key reason why we see the market moving into a surplus this year . The OPEC …
18th January 2022
The deadlocked end to talks between Russia, the US and NATO and subsequent hawkish noises from Russian officials have caused a risk premium to emerge on Russian asset prices and will keep the prospect of tighter Western sanctions on the table. The …
14th January 2022
US oil demand improves, but will remain under pressure Commercial crude stocks slumped last week, reflecting a partial recovery in demand. However, we think demand will remain under pressure as COVID-19 cases rise in the US and as economic growth slows. …
12th January 2022
We see energy prices broadly falling this year as slower global economic growth should cool demand growth, but low stocks of many fuels mean prices will remain historically high and volatile for some time . At the start of last year, we forecast that the …
11th January 2022
Omicron to weigh on demand for a few weeks yet Commercial crude oil stocks fell, but this reflected solid demand from refineries. Implied product demand – particularly for gasoline – slumped, suggesting that the public were cautious about travel in the …
5th January 2022
Demand tempered, but is likely to hold up well for now Commercial crude oil stocks fell sharply last week for the fourth week in a row. That was despite demand for oil products dropping back in line with the seasonal average. Early indicators suggest …
22nd December 2021
We always expected European natural gas prices to remain high over the winter because of low stocks, but heightened uncertainty about supply from Russia has caused prices to skyrocket again. Assuming supply isn’t affected, though, our expectation is that …
21st December 2021
Our estimates show a fall in the risk premium in the oil price since the emergence of the Omicron variant, as concerns over demand resurfaced. But the risk premium is still large, which adds weight to our view that oil prices will fall next year as the …
16th December 2021
Upcoming SPR releases could put a floor under commercial stocks Commercial crude oil stocks slumped last week as domestic demand strengthened and exports jumped. The decline in commercial stocks also came as strategic petroleum reserves fell. In the final …
15th December 2021
OPEC continues to over-promise on supply OPEC oil production increased in November, but once again by less than the group’s target. We think OPEC will continue to under-produce, but it should still account for a large share of the world’s oil production …
13th December 2021
US demand remains healthy, for now US commercial stocks remained range-bound, but there were sizeable additions to stocks of petroleum products. That said, implied product demand remains solid, despite rising new COVID-19 infections. Unless travel …
8th December 2021
Overview – Most commodity prices have fallen in the last week or so following the identification of Omicron – a new, and potentially more transmissible, strain of COVID-19. However, while commentary has generally focused on the effects that the new strain …
7th December 2021
Omicron will weigh on jet fuel demand in the next few months, but the wider hit to demand is still unclear. And although OPEC+ decided to push ahead with its planned oil production increases, we think it will struggle to raise output by as much as planned …
3rd December 2021
US demand still outstripping supply, despite falls US commercial stocks fell as, despite some chunky falls in product demand, US demand is still outstripping supply. Although, the release did shows signs that crude production might finally be responding …
1st December 2021
We were already downbeat on the outlook for most commodity prices in 2022, not least because we thought that prices had lost touch with demand fundamentals. The risk of Omicron-related effects on demand just adds weight to our view . The prices of most …
29th November 2021
The announcement of the co-ordinated release of oil reserves by the US and other large oil consumers should mean higher supply (and downward pressure on prices) but it will come at a time when we expect that the market will be in a surplus anyway. What’s …
25th November 2021
US demand still buoyant in the face of high prices US commercial stocks rose due to a pre-planned release of reserves and a large drop in exports. But the bigger picture is that product demand remains healthy, adding pressure to a tightening market . The …
24th November 2021
We have left our near-term forecasts for energy prices (which are historically high) unchanged after reflecting on the latest weather forecasts for the upcoming Northern Hemisphere winter. Temperatures are expected to be slightly higher than average over …
European natural gas prices were in the news again last week, soaring by 18%. Given stocks are still low and there are few signs of extra flows from Russia, we think that prices will remain high in the near term . The European natural gas market has …
23rd November 2021
The big picture is still one of healthy US demand The latest weekly data show falling crude and petroleum product inventories and a jump in implied demand. The strength in demand is somewhat surprising given the rise in gasoline prices, but we suspect …
17th November 2021
Policy changes to boost Chinese coal production and curb demand growth in 2022 Economic growth and self-sufficiency to take priority over environmental sustainability But long-term outlook appears more consistent with environmental goals In this Energy …
16th November 2021
Increases in OPEC production to continue to fall short Although OPEC oil production increased in October, it remained significantly below the group’s target. And with little prospect of a meaningful increase in non-OPEC output in the near term, we …
11th November 2021
Crude stocks rise for a second week but will remain low for a while Crude oil in commercial storage rose last week for the second week on the trot, helped by a planned release of strategic reserves. But the big picture is that stocks remain low by past …
10th November 2021
This year, the EU announced reforms to its Emissions Trading Scheme (ETS) which, if introduced, would boost the price of each carbon permit and ultimately help the bloc to rapidly reduce its greenhouse gas emissions. In the first of a two-part Focus …
Overview – Following sizzling rallies in the prices of energy commodities in 2021, we expect prices to ease back in 2022 on the back of lower growth in demand and improved supply. Current high prices will incentivise producers to raise output and will …
1st November 2021