In 2016 and 2017, Mainline expansions and new pipeline takeaway from the Bakken and PADD IV will result in in-creased capacity for North to South crude ﬂows in the midcontinent.
The decision by the producer group to not “freeze” production is a bit like Russian General Kutuzov not surrendering Moscow to Napoleon in 1812. Lower prices in the short-term will encourage lower production in many countries including the U.S.
Bloomberg: April 17, 2016
Oil slipped a second day as a meeting of major crude producers in Doha this weekend is seen having minimal impact on supplies. Futures slipped 0.6 percent in New York. Delegates from OPEC and other….
Argus Media, April 14, 2016
But Sarah Emerson, president of research firm ESAI, recently said she believes ANS to be a prime candidate to begin moving to Asia-Pacific as it did from 1996 to 2004.
Bloomberg: April 6, 2016
“I suspect there won’t be any agreement to cut or freeze output, but that doesn’t mean the meeting is not important,” said Sarah Emerson, managing director of ESAI Energy Inc., “They’re going from no discussion or game plan…
An OPEC-non-OPEC production freeze will be too little too late to impact the crude oil surplus in a manner that liquidates inventories. The upside for crude prices is limited, but even so, crude prices will rise seasonally along with still healthy gasoline markets.
The 21st century marks a departure from traditional geopolitics. Transnational movements, such as radical Islam, have pushed terrorism and now refugees on to the foreign policy agenda of many countries. Meanwhile industrial-ized countries increasingly blame domestic economic weakness on globalization. As a result, a nationalist backlash is gaining steam on issues related to security, trade,…
While the ceasefire may not last, and a near-term political settlement in Syria is unlikely, ISIS’s prospects in both Iraq and Syria appear to be decreasing. Do not expect enough political stability in either country to allow for consistent economic growth.
ESAI Energy estimates that the amount of refining capacity at risk of closure will rise back to more than 800,000 b/d in 2017 after falling to almost zero in 2015. OECD refiners will cut runs by 100,000 b/d in 2016 after a nearly 1.1 million b/d year-on-year rise in 2015.
NYH gasoline spreads will rise above $20 per barrel this summer. Demand growth, which will be smaller this year compared to 2015, is only part of the reason behind anticipated gasoline strength in 2016. More notably, weak demand and oversupply for other refined products, especially diesel, will limit throughput and constrain gasoline supply.
The EU-16’s crude import requirement will remain unchanged at about 8 million b/d from 2015 to 2016 as a forecast drop in refinery throughput is mostly offset by a decline in North Sea production. Meanwhile, a resurgent Iran, intent on restoring European market share, will push barrels into Europe, and thus place downward pressure on European crude prices. As a result, Russia and other suppliers will have a portion of their exports crowded out of the European market.
The ongoing civil war and the rise of ISIS in Libya will carry on for years. Western powers are taking steps consistent with counter-terrorism but not necessarily supportive of reconciliation or the establishment of a functioning government.
After falling in 2016, crude oil output growth should return to Latin America and reach 100,000 b/d by 2020. Growth will come as a liberalization trend sweeps the region’s oil industries in the short term due to low oil prices and a political shift to the right. As a result, foreign investment and participation in Latin America’s upstream will be a key component of production increases in the second half of the decade.
Russia will export about 180,000 b/d more crude in 2016 compared to last year. Exports via pipelines and Far East ports leading directly to Asia will only increase 50,000 b/d, with the remainder of the growth coming in outflows from European ports. Higher exports from European ports will encourage greater outflows of Russian crude from Europe to Asia, intensifying the battle for market share there as well as in Europe.
The ongoing civil war and the rise of ISIS in Libya will carry on for years. Western powers are taking steps consistent with counter-terrorism but not necessarily supportive of reconciliation or the establishment of a functioning government. This means Libya’s crude production will remain constrained by realities on the ground perhaps for years.