Global Oil Market

[dan_s]

Comments below from John White at Roth Capital:

The U.S. EIA said on 1/10/2017 it has raised its price and production forecasts for WTI and Brent crude oil for 2017 and offered its first projections for 2018. In its monthly energy outlook report, the government agency forecast WTI prices at $52.50/bbl for this year, up from $50.66/bbl in the December forecast. For 2018, it forecast $55.18/bbl WTI. Brent crude is seen at $53.50/bbl this year and $56.18/bbl next year. The EIA also raised its estimate on U.S. crude production to 9.0 million b/d for this year, compared with the previous forecast for 8.78 million b/d. For 2018, it forecast output of 9.3 million b/d. [U.S. oil production peaked at 9.7 million b/d in mid-2015.]

Saudi Arabia has cut oil output to its lowest in almost two years, its energy minister said on 1/12/2017, as the world's largest oil exporter leads OPEC's drive to eradicate a global glut and prop up prices, according to Reuters. Energy Minister Khalid al-Falih said output had fallen below 10 million b/d, more than it had promised as part of a global output cut deal between OPEC and non-OPEC producers. Such levels were last seen in February 2015, when Riyadh began to steeply raise production to deal a blow to U.S. shale oil producers, effectively, becoming the architect of a prolonged oil price crash.

On 1/12/2017, Reuters reported that China's CNPC (CNPET.UL-NC) is forecasting record oil demand for 2017. China's crude oil demand will grow by 3.4% percent this year to a record of almost 12 million b/d, the country's top oil producer forecast on Thursday. Total crude oil consumption is pegged at 11.88 million b/d.

Also on 1/12/2017, Reuters reported that China’s 2016 vehicle sales climbed 13.7% year over year, the China Association of Automobile Manufacturers, said on Thursday. This is the fastest annual sales growth since 2013. Sales in world's largest auto market totaled 28 million vehicles last year, while for the month of December they rose 9.5% percent to 3.1 million, said the association.

Venezuelan state energy company PDVSA projects oil production will remain near 23 year lows in 2017, an internal document shows, suggesting more hardship ahead for the crisis wrought OPEC member country, Reuters reported on 1/13/2017. Cash-squeezed PDVSA, which accounts for nearly all of Venezuela's export revenues saw production tumble by nearly 10% in 2016. For 2017, PDVSA sees production at 2.501 million b/d, barely an increase from the 2.496 million b/d for the first 11 months of 2016, according to a nine-year strategic plan presented in December. That is broadly on par with output levels in 1993, as the struggle to pay providers has led some services companies to halt work and oil suppliers to delay or halt deliveries of fuel and crude.