This year, global gasoline and diesel trade flows will shift due primarily to a significant increase in Middle Eastern production of both products. Inflows of gasoline into the Middle East from both Europe and Asia will fall by a combined 160,000 b/d, while outflows of diesel, primarily destined for Europe and Africa, will rise by roughly 150,000 b/d.
Import substitution in China’s polymers and paraxylene markets will negatively affect feedstock demand in markets that export to China, exacerbating oversupply in the naphtha market.
As 2019 stretches out ahead of us, the World Economic Forum will meet this week and is likely to highlight the rise of competition over collaboration between countries, and the implications for the global economy. The global oil market is not immune to these forces. Notwithstanding the “cooperation” represented by the recent OPEC deal, falling OPEC exports and rising US exports will be unsettling this year. Competition in the oil markets is likely to intensify by the end of 2019. That is generally bearish for oil prices.