global oil overview and outlook...1. global oil overview & outlook –sophie udubasceanu 2....
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Global oil overview and outlook
1. Global oil overview & outlook – Sophie Udubasceanu
2. North Sea developments – Richard Price
3. Insight into the US oil market – Ignacio Sotolongo
4. Oil products outlook – Michael Connolly
5. Focus on the US naphtha market – Michael Sims
6. Q&A
Agenda
30/09/2020 2Global oil overview and outlook
World Crude Report
330/09/2020 Global Oil Overview and outlook
• Round the clock coverage
• 3 daily updates
• Physical and futures market pricing
• Assessments at 5 daily timestamps
• Market 7-day outlook and editorial features
• Regional physical sections:
• Asia Pacific, Arab Gulf, North Sea, West Africa, Mediterranean, CIS and Americas
Crude oil overview & outlook
4
Sophie Udubasceanu
- 30 m bbl/day of demand
5
A three-pronged attack from Coronavirus
6
Fall in oil and energy
demand
Travel: Lockdown leads to reduced flights, car usage. Started off with China and spread swiftly across the world01
Industry: Many factories, heavy industry and construction, including a reduced refining activity02
Economy: World could enter recession; China’s GDP growth rate for 2020 revised down while other countries also followed suit. Most governments rolled out economic relief packages
03
“No prospect of demand returning to the historical average during the remainder of 2020”
IEA
Demand threat
30/09/2020 7
OPEC production
8
More than 24m bbl/day
-7.7m bbl/day
The OPEC+ agreement cameinto force on 1 May
30/09/2020 Global oil overview and outlook
0
5
10
15
20
25
30
35
Sep-2019 Oct-2019 Nov-2019 Dec-2019 Jan-2020 Feb-2020 Mar-2020 Apr-2020 May-2020 Jun-2020 Jul-2020 Aug-2020
in m
illio
n b
arre
ls p
er d
ay
OPEC Production
Algeria Angola Ecuador Equatorial Guinea Gabon
Iran Iraq Kuwait Libya Nigeria
Qatar Saudi Arabia United Arab Emirates Venezuela
US oil rig count weakening
9
179US oil rig count down from 562 in April
10.7m bbl/dayUS Oil production
5 m
6 m
7 m
8 m
9 m
10 m
11 m
12 m
13 m
14 m
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Jun
-14
Au
g-1
4
Oct
-14
Dec
-14
Feb
-15
Ap
r-1
5
Jun
-15
Au
g-1
5
Oct
-15
Dec
-15
Feb
-16
Ap
r-1
6
Jun
-16
Au
g-1
6
Oct
-16
Dec
-16
Feb
-17
Ap
r-1
7
Jun
-17
Au
g-1
7
Oct
-17
Dec
-17
Feb
-18
Ap
r-1
8
Jun
-18
Au
g-1
8
Oct
-18
Dec
-18
Feb
-19
Ap
r-1
9
Jun
-19
Au
g-1
9
Oct
-19
Dec
-19
Feb
-20
Ap
r-2
0
Jun
-20
Au
g-2
0
In b
bl/
day
US Rig count (Baker Hughes) US Oil production (EIA)
The sustainability transformation
1030/09/2020 Global Oil Overview and Outlook
Bio-diesel Bio-gasoline Bio-Jet
Sustainable oil products
Traditional refinery
Oil Supply Outlook
11May 2020
Global oil overview and outlook
Source: OPEC+, EIA
The US supply forecast decrease is vs the January 2020 oil production figure
Source: CDI, part of ICIS
Revised forecast: world oil use to rise to
96.7 MMB/D next quarter before decreasing
seasonally to 95.6 MMB/D during the first
quarter of next year.
12
2nd
WaveWill the impact be localised?
• Concerns over a recession
• Will global economies recover over the the next few months?
• Extent of a second Covid-19 wave in October
• How will this impact oil demand?
• Double dip in Chinese demand
• Difficult in restarting when other countries continue to have
restrictions
• Demand improvement
• Jet fuel demand, Long term consequences
Market outlook
13
Electrification
Key factors to watch
30/09/2020 Global oil overview and outlook
EconomyThe threat of a global recession
The sustainability movement
• How the dispute will progress?
• Reaction to theUS presidentialelections
• Is the deal enough?
• Improvement in demand could ease the oversupply
Demand OPEC+
US-ChinaUS
election
North sea developments
14
Richard Price
North Sea CIF cargoes
15Date Presentation title
North Sea CIF cargoes
16Date Presentation title
Insight into the US oil market
17
Ignacio Sotolongo
Top five oil producing countries (2019)
1830/09/2020 Global crude oil overview and outlook
The ChallengeA Perfect Storm
US Crude Oil Production
US Crude Oil -Import/Export
US/China Trade Agreement
Trade Agreement – Phase 1
US PRESIDENTIAL ELECTIONS
The Candidates
Key challenges in Q4 2020
19Global crude oil overview and outlook
The US shale oil industry
20Date Presentation title
Top 10 importing countries in 2020
21Date Presentation title
Top 10 importing countries in 2020
2230/09/2020 Global crude oil overview and outlook
Crude imports in k bbl/day
Overview of the US pipeline sector
23
Typical products from a 42-gallon Barrel of Crude Oil
2430/09/2020 Global crude oil overview and outlook
25Date Presentation title
Top 10 importing countries in 2020
26Date Presentation title
TrumpRepublican candidate
BidenDemocrat candidate
27Date Presentation title
vs
US crude stocks continue to swell
28
494m bblHurricane Laura impacted oil injections
10.7m bbl/dayUS Oil production
0
2000
4000
6000
8000
10000
12000
14000
0
100
200
300
400
500
600
Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20
in t
ho
usa
nd
bb
l/d
ay
in m
illio
n b
bl
US Crude stocks US Crude production
TrumpRepublican candidate
BidenDemocrat candidate
29Date Presentation title
vs
Top 10 importing countries in 2020
30Date Presentation title
Oil products outlook
31
Michael Connolly
The impact of COVID-19 will continue through 2021 as cities, regions and entire countries have further waves, resulting in lockdowns
Reduction in Gasoline / Jet / Diesel demand on average from 2019 in first 7 months of 2020
RecoveryIn 2021 broadly expected gas/diesel to be relatively flat or declining compared to “recent month” levels. Jet will continue to recovery at a slow pace
9 Mbbl/dKey Product Demand 2020 vs. 5 yr. Average
Source: ICIS Analytics, local Gov’t data;
Based on sample of countries totalling c.70% of total demand in each product
Product YTD Recent MonthEstimated
Mbbl/d reduction
Gasoline 87% 93% -3.3
Jet 64% 53% -2.8
Diesel 91% 95% -2.5
Focus on the US naphtha market
33
Michael Sims
Naphtha’s place in the value chain
RefineryCrude Oil
Heavy Naphtha
Light Naphtha
Gasoline
Petrochemicals
Supply outpaces demand before and after coronavirus
-Coronavirus demand
shock and crude oil crash
temporarily increase
attractiveness of naphtha
as cracking feedstock
-Exports soar on low US
prices
-Recovering crude buoys
prices, subdues exports
Contracts at 18-year low
US Stream Cracking Margins
Source: ICIS Margin Analytics
-After brief uptick in Q2/Q3,
Naphtha’s share of US
steam cracking feedslate
falls to record low (between
2 and 3 percent)
US Exports to Asia Soar in H1 2020
Source: ICIS Supply and Demand
-A wide arbitrage window
and surging demand in Asia
resulted in record export
volumes in H1.
Main drivers
385 October 2020 La Volatilidad del petróleo
Outlook - Global Oil Markets
Demand
OPEC+
LockdownEconomy
US
Thanks for listening. Questions?
For further questions, please send market enquiries to:
Sophie Udubasceanu
Global Oil Editor
T: +44 (0) 20 7911 1889
Richard Price
Deputy Global Oil Editor
T: +44 (0) 20 7911 3118
Ignacio Sotolongo
Senior Oil Editor
T: +1 832 404 3710
Michael Connolly
Senior Consultant
T: +44(0)7816 547234
Michael Sims
Markets reporter
Feedstocks & Olefins
T: +1 713 569 8659