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BP says oil demand and supply will both rise next year, supply growth to outpace

Via Bloomberg comes this from oil firm BP, in brief:

 

  • expects global oil consumption will return to pre-pandemic levels in Q3 2022
  • Asia persisting as the centre for oil-product demand growth
  • 2022 oil demand expected average gain of 3.8 m bpd y/y v (down from 2021 at 5.4 m bpd)

 

On the supply side of the ledger:

 

  • global oil output growth will probably exceed consumption in 2022
  • OPEC+ and US producers will add more output

Oil falls through yesterday’s low in quick turn lower as sentiment deteriorates

WTI down 70-cents to $69.58

WTI down 70-cents to $69.58
Chatter about a resuming Iran nuclear talks is combining with negative risk sentiment to weigh on oil.
WTI fell through yesterday’s low down to $69.58 as it eats further into last week’s gains.
The two-hour chart now isn’t looking great with a minor head and dhoulders top in place targeting a fall back to last week’s lows.
Oil — like everything else — is now looking to China for a read through on global GDP. In the shorter term though, it will be down to the Fed and PBOC to signal what’s next for markets.

Just under 30% of gulf crude remains offline after hurricanes Ida and Nicholas

An update via Platts on Gulf of Mexico producers, they peg 28% of production yet to return and note that there are still 2 months left of the hurricane season.

  • 95% of US Gulf oil and gas production was shut in near the end of August as Category 4 Ida made a Louisiana landfall
  • The return of natural gas supplies continued to lag a bit more than oil
  • Category 1 Nicholas, which hit the Texas Gulf Coast Sept. 13, had a much more modest impact on the Western Gulf and on slowing restoration activities.
Ida in late August:
An update via Platts on Gulf of Mexico producers, they peg 28% of production yet to return and note that there are still 2 months left of the hurricane season. 

EIA weekly oil inventories -6422K vs -3544K expected

Weekly data from the EIA

  • Crude prior -1529K
  • Distillates -1688K vs -1612K expected
  • Gasoline 1858K vs -1957K expected
Yesterday’s private data from the API:
  • Crude -5437K
  • Gasoline -2716K
  • Distillates -2888K
  • Cushing -1345K
The US SPR stocks fell by 529K bpd. US agsoline demand over the past four weeks is running at 9.41 mbpd.
There has been some minor buying on this but oil had already been sizzling today on expectations that some natural gas power demand will be switched to petroleum due to the energy crisis ongoing in Europe and elsewhere.
oil chart

IEA says progressing vaccinations should unlock pent-up demand for oil in Q4

IEA remarks in its monthly report

  • Vaccine rollouts should help to unlock stymied demand for oil, especially in Asia
  • Signs that COVID-19 cases are abating should see demand rebound sharply by 1.6 mil bpd in October and continuing to growth until year-end
  • Unplanned outages from Hurricane Ida offset increases by OPEC+
  • Estimates that global oil demand fell for three straight months to date amid the COVID-19 resurgence in Asia
  • Adds that the market should shift closer to balance from October if OPEC+ continues to unwind output cuts
  • By early 2022, supply will be high enough to allow oil stocks to be replenished
A good summary on the oil market situation right now as delta variant concerns are still persisting but less impactful as what we saw over the past few months. Adding to that is the hype surrounding fossil fuels amid a cold winter and higher energy prices.
Oil is up 0.8% today and testing the $71 mark as buyers look to build on a daily break above $70 in trading yesterday.

Oil – US Gulf copping it again, this time Tropical Storm Nicholas

The US oil industry is still struggling to recover from the damage from Hurricane Ida.

Circa 40% of capacity is still compromised.
Now a new storm is slowing efforts at recovery, at least this one does appear to be as intense as Ida. Tropical Storm Nicholas may gather intensity though, the US National Hurrican Center say:
  • A Hurricane Watch is in effect for…* Port Aransas to San Luis Pass Texas
The US oil industry is still struggling to recover from the damage from Hurricane Ida. 

OPEC forecasts global oil demand will exceed pre-pandemic levels in 2022

OPEC monthly report is out

OPEC
  • Sees world oil demand next year rising 4.15 Million Bpd  versus 3.28Mln in prior monthly report but 4.2 mbpd at Sept OPEC+ meeting.
  • Sees demand at 100.8 mbpd next year, exceeding pre-pandemic levels
  • August oil output rose 150k bpd (less than the 400k bpd increase in quotas)
  • Keeps 2021 full year demand growth virtually unchanged at 5.96 mbpd
  • 2021 non-OPEC supply lowered by 170 kbpd due largely to outages in gulf of Mexico
  • Says oil demand in 3Q21 has proved to be resilient
  • Global economic growth forecasts for both 2021 and 2022 remain unchanged from the last month’s assessment at 5.6% and 4.2% respectively
  • OECD oil stocks were 57 million barrels below the five-year avg
(more…)
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