When will the oil supply catch up with demand?

1. When will there finally be an oversupply of crude oil?

– The ongoing public unrest between the US and OPEC continues to revolve around the oil market’s immediate prospects, namely its transition to oversupply after several months of global stock pulls.

– The recent outlook from OPEC, IEA and EIA all indicate that markets should turn into oversupply in Q1-2021, with EIA forecasts that it will average around 900,000 b / d during January-March.

– While OPEC remains ambiguous about its own production strategy for 2022, energy agencies seem to agree that next year should see a higher-than-expected supply from non-OPEC, primarily from the US, but also from Canada and Guyana.

– Projections of an impending oversupply only confirm OPEC’s statement to the Biden administration that production does not need to increase, as the market would soon balance itself anyway.

2. Saudi crude oil exports move within 5-year interval

Latest JODI data suggest that Saudi Arabia’s crude oil exports averaged 6.52 million b / d in September, the highest since January, and for the first time since May 2020 moved into the 5-year range.

At the same time, Saudi crude oil stocks returned from their lowest values ​​ever in September, adding more than 3 million barrels to a total of 136.5 million barrels.

– After higher than average crude oil combustion rates in the summer months, the kingdom’s use of crude oil for electricity production fell to 543,000 b / d in September …

1. When will there finally be an oversupply of crude oil?

Raw

– The ongoing public unrest between the US and OPEC continues to revolve around the oil market’s immediate prospects, namely its transition to oversupply after several months of global stock pulls.

– The recent outlook from OPEC, IEA and EIA all indicate that markets should turn into oversupply in Q1-2021, with EIA forecasts that it will average around 900,000 b / d during January-March.

– While OPEC remains ambiguous about its own production strategy for 2022, energy agencies seem to agree that next year should see a higher-than-expected supply from non-OPEC, primarily from the US, but also from Canada and Guyana.

– Projections of an impending oversupply only confirm OPEC’s statement to the Biden administration that production does not need to increase, as the market would soon balance itself anyway.

2. Saudi crude oil exports move within 5-year interval

Saudi

– Latest JODI data suggests that Saudi Arabia’s crude oil exports averaged 6.52 million b / d in September, the highest since January, and for the first time since May 2020 moved into the 5-year range.

At the same time, Saudi crude oil stocks returned from their lowest values ​​ever in September, adding more than 3 million barrels to a total of 136.5 million barrels.

– After higher than average crude oil combustion rates during the summer months, the kingdom’s use of crude oil for electricity production fell to 543,000 b / d in September and will certainly fall further in the coming months.

According to Kpler data, Saudi Arabia added almost half a million barrels a day in total exported quantities last month, with the monthly average hitting 6.99 million b / d.

3. Thanks to Iranian condensate, Iran is increasing crude production

Iran

– No matter how difficult they may be to track, Venezuela’s crude oil exports reportedly exceeded the 700,000 b / d mark in October amid increased mixing capacity.

– Two VLCCs with Iranian condensate have been discharged at Venezuela’s Jose Terminal in July and October this year, which greatly helps the Latin American country’s mixing potential.

– With this, the state-owned PDVSA managed to recover from the weakness of recent months and produce the third highest output number this year.

– Most Venezuelan cargo either goes directly to China or is transferred from ship to ship in the Strait of Malacca, initially establishing Malaysia as the final destination.

4. Nord Stream 2 delay jeopardizes price recovery

Nord Stream

– The German Energy Regulatory Agency decided to suspend the approval of Russia’s Nord Stream 2 pipeline and demanded that the operator establish a German subsidiary under German law.

– At the same time, Gazproms sent no additional capacity for December transit via the Yamal-Europe pipeline shock waves across Europe’s gas market, as supply shortages remain an important challenge.

German gas in units that are currently only 62% full is on the rise pressure as the country’s warehouses turned to withdrawals since November 02.

– Day-ahead TTF prices traded around € 85 per MWh ($ 97 / MWh) from Friday, an increase of more than 17% week-on-week.

5. Qatar shifts focus to Asian LNG buyers

QatarSource: Kpler.

– With oil-related LNG prices currently trending around $ 14 per barrel. mmBtu, Qatar has experienced a barrage of buying activity from Asian buyers, who have already shipped 5.2 million tonnes to Asia this month.

– Although South Korea has been the top destination for the past three months, with average monthly departures averaging around 1 million tonnes of LNG, China is leading so far in November in a sign of rejuvenating domestic demand in China.

– By producing the highest monthly LNG export volume to Asia in November to date, Europe’s share has shrunk to its absolute minimum, in fact the lowest since at least 2015 by 8%.

Qatar has also sought to increase its foothold in Asian LNG infrastructure, and has only recently applied for approval to invest in Pakistan’s upcoming import terminal.

6. Chevron, Exxon is among the largest users at the Biden offshore auction

Gulf

– The first rental sale held under the Biden Administration, the U.S. Gulf of Mexico Leasing sale 257, raised $ 192 million in acquired drilling rights.

– The US major ExxonMobil, which so far had little offshore area after selling most of its leases on shallow water a few years ago, offered 92 areas as it seeks to kickstart its CCS projects.

– Chevron was the most active bidder in the rental business, landing 34 funnels for a total of $ 46 million, with Anadarko close to number two and landing the auction’s most expensive area, Alaminos Canyon just south of Houston.

– Lease Sale 257 is one of the last auctions that could take place under the current five-year lease plan, and the risks are that Washington does not want to extend the plan in its current form.

7. US coal prices catch up with global prices

Coal

– US coal prices have risen to their highest level in 12 years, as ever-increasing demand grows higher than domestic production.

– Coal from Central Appalachia rose more than 10 USD per. tonnes this week and is currently estimated at around USD 90 per tonne. tons this week, according to to Platts.

– As US inflation has already accelerated to its highest level since 1990, at 6.2%, higher coal prices increase the risk of further energy-related inflation.

– Asian coal prices, which are generally considered to be closest to a global benchmark, have developed largely flat in November with ICE Newcastle around $ 150 per tonne. ton.

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