Energy Prospectus

Comments from Scott Sheffield at the OPEC conference: https://finance.yahoo.com/video/pioneer ... 06179.html


Watch the short video at the link above. About 3 minutes long.

Scott is the Chairman of Pioneer Natural Resources (PXD), a pure play on the Permian Basin and one of the largest companies in our Sweet 16
He predicts that OPEC's "official" increase in the quotas will be 600,000 barrels per day. Reality is that it will be tough for them to get there with Venezuela & Libya on decline and Iran production to fall off a cliff when the full impact of U.S. sanctions go into effect.

Scott sees Permian Basin oil production going flat from September, 2018 to September, 2019.

Scott expects Brent oil to be range bound in the $73 to $80 per barrel range.

Brent crude oil spot prices averaged $77/b in May, an increase of $5/b from April and the highest monthly average price since November 2014.
EIA expects West Texas Intermediate (WTI) crude oil prices will average almost $7/b lower than Brent prices in 2018 and $6/b lower than Brent prices in 2019.

In the June 2018 update of its Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) forecasts Brent crude oil prices will average $71 per barrel in 2018 and $68/bbl in 2019. The new 2019 forecast price is $2/b higher than in the May STEO. The increase reflects global oil markets balances that EIA expects to be tighter than previously forecast because of lowered expected production growth from both the Organization of the Petroleum Exporting Countries (OPEC) and the United States.
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MY TAKE is that EIA just uses the NYMEX strip for their long-term oil price forecasts.

EIA expects a decline in Iranian crude oil production and exports starting in November 2018, when many of the sanctions lifted in January 2016 are slated to be re-imposed. Iranian crude oil production is expected to fall by 0.2 million b/d in November 2018 compared with October and by an additional 0.5 million b/d in 2019.

The outlook for Venezuelan production is also lower than in the May STEO, with EIA now expecting larger declines in both 2018 and 2019 than previously forecasted. The seizure of state oil company PdVSA’s assets in the Caribbean by ConocoPhillips has diminished PdVSA’s ability to continue meeting its export obligations because it now must rely solely on domestic ports and ship-to-ship transfers to sustain crude oil exports. Venezuela’s domestic export infrastructure, however, is in disrepair and unable to accommodate the volume of exports previously handled out of its Caribbean facilities.

EIA expects that decreases in Iranian and Venezuelan production will be partially offset by increased production from Persian Gulf producers, most notably Saudi Arabia, which will likely increase production in an effort to offset Iranian production losses. Other sources of increasing production include Kuwait, the United Arab Emirates, and Qatar, all of which have been restraining their crude oil output in compliance with the November 2016 OPEC/non-OPEC agreement on production cuts.