Energy Prospectus

Opening Prices at 8AM CT:
> WTI oil price is up $1.70 to $41.83
> HH natural gas price is down $0.146 to $2.848

Oil Price Fundamental Daily Forecast – Bolstered by Big Jump in October Refinery Processing in China
Traders seem to be leaning toward the upper end of the trading range due to renewed hopes for a vaccine and additional fiscal stimulus from the U.S.
Read more: https://www.fxempire.com/forecasts/arti ... ina-683538

Oil CEOs believe a demand recovery is coming, but volatility is here to stay
in Oil & Companies News 16/11/2020

Top energy chief executives say oil demand will recover next year, but they expect volatility to remain elevated, as the industry emerges from the reckoning of the coronavirus pandemic.

“We face a lot of uncertainty,” Total CEO Patrick Pouyanne told an invitation-only gathering of more than 30 senior oil and gas executives, who met virtually on Wednesday for the Abu Dhabi CEO Roundtable.

“We all hope that demand will recover as quickly as possible,” Pouyanne said. “Nobody knows exactly how long it will take to get out of the pandemic, when we’ll have this vaccine, and how long it will take to reopen the global economy,” he added.

A source familiar with the discussions said the mood among the executives was more upbeat than the last meeting held in June, with news of a potential vaccine giving executives a boost of confidence. Leaders expressed a cautious optimism about the global economic recovery and discussed the need to focus on cost reductions and technology gains.

“We should have optimism, and we should have a sense of reality,” BP CEO Bernard Looney told the gathered executives.

“We don’t control the price of our product, but we do control our cost structure, our investment levels, and the efficiency of that,” Looney added. “The fundamentals that we all learned as we were growing up in this industry will serve us well in the long run.”

The International Energy Agency (IEA) has previously said that this year’s global energy demand decline will be seven times larger than the fall following the 2008/2009 financial crisis. Most analysts expect global oil demand will take several years to recover to pre-crisis levels of 100 million barrels per day.

The oil and gas industry has demonstrated remarkable resilience over the past few months, and we know the long-term fundamentals of the industry remain intact as the world will still need hydrocarbons for many decades to come,” Al Jaber said.

At the last meeting in June, executives agreed “the worst is behind us” and they were “hopeful of a stronger second half” despite only seeing a modest price recovery in that time.

The same source close to the latest conversation also said there was a consensus among participants that the industry can come together around solutions to climate change, believing the market will pay a premium for low carbon barrels.

“We’re excited about where we’re headed and we believe we can make an impact,” Vicki Hollub, president and CEO of Occidental Petroleum, told the group.

Occidental recently became the first major U.S. oil producer to aim for net zero emissions from its own operations by 2040. The Abu Dhabi National Oil Company also plans to expand Carbon Capture Utilization and Storage (CCUS) to capture 5 million tons of carbon annually by 2030, and recently signed an agreement with Total to explore a partnership in CCUS and emissions reduction.

“ADNOC is focusing on ensuring that we deliver the most carbon-efficient barrels in the industry by doubling down on CCUS while exploring new energies like hydrogen,” Al Jaber added.

Others in attendance included officials from Saudi Aramco, ExxonMobil chairman and CEO, Darren Woods, ENI CEO Claudio Descalzi, Reliance Industries Chairman Mukesh Ambani, INPEX president and CEO Takayuki Ueda, CNPC Chairman Dai Houliang and Lukoil president and CEO Vagit Alekperov, among others.
Source: CNBC

The global oil market is now in "a cone of uncertainty" (my favorite hurricane season term).

On November 12 Reuters reported global oil demand is unlikely to get a significant boost from the roll-out of vaccines against COVID-19 until well into 2021, the IEA said on Thursday, a view that is likely to dampen oil price gains since vaccine progress was announced earlier this week. "It is far too early to know how and when vaccines will allow normal life to resume. For now, our forecasts do not anticipate a significant impact in the first half of 2021," the IEA said in its monthly report. "The poor outlook for demand and rising production in some countries ... suggest that the current fundamentals are too weak to offer firm support to prices."

While noting that OECD countries had modestly drawn down their crude oil stocks for two months in a row by September, the IEA said that storage levels were still not far from peaks in May at the height of the pandemic. It cited a resurgence of Covid-19 infections in Europe and the United States and renewed lockdown measures for revising down its outlook for global oil demand for 2020 by 400,000 b/d compared with its last estimate.

The IEA reduced its demand forecast for 2020 by 400,000 b/d and cut 2021 by 100,000 b/d, though the agency reduced its 2020 Non-OPEC production growth forecast by 100,000 b/d. The IEA still expects robust year over year demand growth of 5.8 million b/d in 2021, but cautioned that a COVID-19 vaccine won't make a major impact until 2H21.

The IEA reduced its forecast for 2020 annual demand growth from negative 8.4 million b/d to negative 8.8 million b/d due to weaker 3Q20 data as well as the resurgence of COVID-19 in the U.S. and Europe, which prompted a 1.2 million b/d negative 4Q20 revision. The IEA increased its 2021 oil demand growth estimate by 300,000 b/d to 5.8 million b/d due to the 2020 downward revisions, but lowered its 2021 demand forecast by 100,000 b/d to 97.1 million b/d.

The IEA reduced its 2020 Non-OPEC oil/NGL production estimate by roughly 100,000 b/d and now expects Non-OPEC oil/NGL production growth of negative 2.7 million b/d this year. The IEA also left its 2021 Non-OPEC oil/NGL forecast unchanged at 63.5 million b/d, but year over year growth rose to 500,000 b/d due to the upward revisions in 2020.

The IEA is reporting that OPEC production rose by 0.20 million b/d in October vs. September levels to 24.25 million b/d, with the biggest increases coming from Libya and Iraq, with reductions from U.A.E., Iran, and Venezuela.

The IEA reported that commercial oil and products inventories fell by 0.6% in September vs. August levels to 3,192 million barrels, and preliminary data shows that oil stocks fell again in October. Additionally, floating storage of crude oil fell by 18 million barrels in October from its September levels to 156 million barrels.

On November 13 Reuters reported Michigan's Governor Gretchen Whitmer is revoking a nearly 70 year old easement that could force Canada's Enbridge (ENB-NC) to shut down a pipeline that delivers fuel and oil to the U.S. Midwest. The move would require the line to be shut by May 2021. Whitmer said that Enbridge has failed to protect the U.S. Great Lakes, where the pipeline runs, by preventing the line from being damaged. The Enbridge Line 5 pipeline runs under the Straits of Mackinac, where Lakes Huron and Michigan meet, and ships 540,000 b/d of light crude oil and propane, serving both retail customers and refiners in Michigan and Ohio. It is a critical part of the company's network that delivers the bulk of Canadian crude exports to the United States and eastern Canada.

Closing Prices:
> WTI prompt month (DEC 20) was up $1.21 on the day, to settle at $41.34/Bbl.
> In contrast, NG prompt month (DEC 20) was down $0.298 on the day, to settle at $2.697/MMBtu.

https://aegis-hedging.com/insights/november-16-2020-2/