Sverdrup to Lead North Sea Recovery

After falling for the second straight year to 2.6 million b/d in 2018, North Sea crude and condensate production will plateau in 2019 before rising sharply in 2020 as a result of the start-up of Equinor’s Johan Sverdrup mega-project. Led by Norway, North Sea output will continue to grow at an average annual rate of 70,000 b/d from 2020 to 2023, when it will reach 2.9 million b/d.

Market Alert: Year-Round E15

The latest talks over the RFS resulted in the announcement that the Trump administration will allow E15 gasoline to be sold year-round. Although policy details remain unclear, this development will move the RIN market into surplus, reduce D6 RIN prices, increase blending of ethanol into the gasoline pool at the expense of petroleum based components, and temper the recent crude-led rise in gasoline prices.

Has OPEC Risen to the Challenge?

The decision by Saudi Arabia, Russia and ostensibly the rest of OPEC to extend the production cut through the first quarter of 2018 is not a surprise, except for the addition of the first quarter of 2018. Extending through early 2018 signals that the producers understand the magnitude of the challenge. Whether they rise to the challenge depends on their success this summer. OPEC needs to do as much as possible now to temper the surplus coming in the first quarter.