Morgan Stanley's expert on the global oil market, Martijn Rats has issued a new report.
Martijn is head of the European Oil & Gas Research team and lead analyst on key stocks including Royal Dutch Shell, BP, Total and Eni. He is also the strategist for Morgan Stanley Research’s oil
price forecasts.
"We bring together September forecasts for the oil market balance from the IEA, EIA and OPEC, and compare with our estimates. For 2018, all three agencies see an under supplied global oil market, with OPEC forecasting the largest stock draw, of 700,000 barrels per day through December, 2018. For 2019, the three agencies see supply and demand almost balanced."
Very interesting to me is that they don't mention Iran in the report, so I assume that the deficit between supply & demand could be much larger if the U.S. really puts the hammer down on Iran.
The consensus is that demand for oil is going up 1.4 to 1.6 million barrels per day in 2019. It looks like wishful thinking that if supply is running 0.7 million barrels per day under demand now that suddenly the oil market will be back in balance in 2019. That only happens if the U.S. and Iran reach an agreement very soon. Now, that is extremely wishful thinking!
See Slide 7 of my podcast: Raymond James thinks OECD oil inventories will level off at around 27 days of supply in 2019 and then go on steady decline 2020 throuh 2023. BTW the last time OECD oil inventories went down to 27 days of supply, WTI was trading for over $100/bbl. It is important to note that the chart on slide 7 was based on the assumption that the U.S. sanctions against Iran would only take 200,000 bbls per day of Iranian crude off the market. We are way past that already.
Global Oil Sept 18: Very Tight by year-end
Global Oil Sept 18: Very Tight by year-end
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Global Oil Sept 18: Very Tight by year-end
If you'd like to see the MS report, send me and email: dmsteffens@comcast.net
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Global Oil Sept 18: Very Tight by year-end
Iran has lost 900,000 bpd in oil exports since April. U.S. sanctions on Iran are set to go into effect in November, but countries have already been slashing purchases. Iran has lost an estimated 900,000 bpd of crude oil exports since April, with shipments down to 1.6 million barrels per day this month. “Iranian oil exports are coming down pretty hard,” Roger Diwan, a veteran oil analyst at consultant IHS Markit Ltd., told Bloomberg.
Saudi Arabia comfortable with $80 oil. Bloomberg reported that Saudi Arabia is not afraid of oil heading north of $80 per barrel, a bullish sign that suggests that Riyadh might not ramp up production to offset declines from Iran. “It casts doubts on whether Saudi Arabia will increase output to compensate for the loss of Iranian crude once sanctions come into effect,” said Carsten Fritsch, an analyst at Commerzbank. Meanwhile, U.S. Secretary of Energy Rick Perry dismissed concerns about a supply crunch, arguing that Saudi Arabia, Russia and the U.S. could add enough supply to the market to compensate for Iran. “I don’t foresee spikes,” Perry said. < Could it be that Saudi Arabia can't increase production? - Dan.
Saudi Arabia comfortable with $80 oil. Bloomberg reported that Saudi Arabia is not afraid of oil heading north of $80 per barrel, a bullish sign that suggests that Riyadh might not ramp up production to offset declines from Iran. “It casts doubts on whether Saudi Arabia will increase output to compensate for the loss of Iranian crude once sanctions come into effect,” said Carsten Fritsch, an analyst at Commerzbank. Meanwhile, U.S. Secretary of Energy Rick Perry dismissed concerns about a supply crunch, arguing that Saudi Arabia, Russia and the U.S. could add enough supply to the market to compensate for Iran. “I don’t foresee spikes,” Perry said. < Could it be that Saudi Arabia can't increase production? - Dan.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group