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More on oil – grim outlook

  
  Analysis
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Scanning across some notes on OPEC and crude, some snippets … not optimistic:

Via RBC:
  • OPEC+ is apparently in crisis management mode
  • We think OPEC+ may make more headway by sharpening its compliance messaging, particularly around perennial underperformers, most notably Russia.
  • we think Saudi Arabia may be amenable to dropping production even further
  • none of these measures will arrest the immediate demand destruction and storage saturation problems that are weighing so heavily, particularly on US prices, they could potentially help ensure a better back half of the year if the COVID-19 crisis is contained
(Bolding above is mine)
Via TD:
  • Although we don’t expect negative prices to remain  …  the imbalance in the offer vs. demand and storage capacity issues could see a repeat of this issue.

IEA sees fall in Q1 oil demand, the first quarterly drop in more than a decade

  
Analysis, Crude
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IEA estimates Q1 oil demand to fall by 435k bpd year-on-year

Oil
  • Q2 pglobal oil demand set to grow by 1.2 mil bpd
  • Assuming that economic activity returns progressively to normal
  • Cuts 2020 oil demand growth forecast by 365k bpd to 825k bpd
The changes to the forecasts and estimates are due to the coronavirus outbreak impact as IEA sees the widespread shutdown of the Chinese economy weighing heavily on demand – more so than OPEC – but they estimate a quicker recovery in the coming quarters.
That said, the agency says that the impact of the coronavirus outbreak will be felt by the oil market throughout the year and it is “hard to be precise about the impact” now.
Back to the headline reading, IEA had previously forecast a growth of 800k bpd in Q1 compared to a year earlier but now expect a contraction of 435k bpd instead – the first contraction since the global financial crisis back in 2009.

EIA lowers US 2020 crude production estimate to 13.18 mbpd from 13.29 mbpd prior

  
Analysis, Crude
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EIA lowers 2020 supply outlook after OPEC

  • Sees supply for 2020 at 102.29 mbpd vs 102.58 mbpd prior
  • Demand seen at 102.14 mbpd vs 102.27 mbpd prior
  • EIA forecasts OPEC crude oil production will average 29.3 million b/d in 2020, down by 0.5 million b/d from 2019
  • Latest report
The swing producer in the world is now shale. In this report, the EIA said it expects total US crude oil and petroleum net exports to average 570,000 bpd in 2020 but that’s down from 750,000 bpd in last month’s estimate.
They continue to see a rise of 0.9 mbpd in US production this year, that’s slower than the 1.3 mbpd rise this year but still above private forecasts, which have fallen to 0.6 mbpd (and lower).

US State dept: Effort to assist Iranian tanker could be viewed as support to terrorist organization

  
Analysis, Crude
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Might be some oil impact from this:

A US State department official says any effort to assist Iranian tanker could be viewed as material support to a US-designated foreign terrorist organization

In reference to

  • US has conveyed its strong position to the Greek government about Iranian tanker it says is transporting illicit oil to Syria

IEA cuts 2014 global oil demand forecast by 60k to 1.29mbpd

  
  Education
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  • Cuts 2014 forecast for non OPEC oil supply growth by 250k to 1.5mbpd
  • Lower Russian projections drive estimates lower
  • OPEC crude supply fell in March by 890k to 29.62mbpd on Iraq, Libya & Saudi
  • Says market balances indicate OPEC will need to raise output in second half of year
  • OECD commercial oil stocks fell by 6.5m in Feb to 2.567tn barrels

Brent crude has been looking slightly cheaper on the cut in demand forecast and the 108.30/50 level is still the level that needs to be broken for a push up. 

Visualizing How Plunging Oil Prices Affect Currencies.The world consumes 93 million barrels of oil, which is worth $4.2 billion

  
  Education
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PETRO STATE
 

Every day, the world consumes 93 million barrels of oil, which is worth $4.2 billion.

Oil is one of the world’s most basic necessities. At least for now, all modern countries rely on oil and its derivatives as the backbone of their economies. However, the price of oil can have significant swings. These changes in price can have profound implications depending on whether an economy is a net importer or net exporter of crude.

Net exporters, countries that sell more oil abroad than they bring in, feel the sting when prices plunge. Less revenue gets generated, and this can impact everything from balancing the budget to the value of their currency in the world market. (more…)

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