Energy Prospectus

I hope you all take the time to read the Morgan Stanley report that we sent out this morning at 7AM CT.

Here is the primary point:
"At the moment, these two analyses together suggest the oil market been approximately
1.99 x 1.39 = 2.8 mb/d undersupplied so far this year. This would be significantly larger
than most agencies have forecast for 1Q21. Assuming OPEC production of ~25 mb/d in
1Q, forecasts from the IEA, EIA and OPEC itself suggest undersupply of 0.5, 2.0 and 0.8
mb/d respectively.
Whether this is due to either lower supply or higher demand is hard to know at this
stage. Also, the number probably needs to be treated with some caution as it implies the
deepest undersupplied market of any quarter since at least 2000. That said, the
analysis is relatively straightforward. That the market is significantly more
undersupplied than consensus balances imply is probably a justified conclusion."

Morgan Stanley: "We raise oil price forecasts to $70/bbl by 3Q."

OPEC+ to Weigh Modest Oil Output Boost at Meeting
Worries about increased supply also weighed on prices after Reuters reported that OPEC+ oil producers will discuss a modest easing of oil supply curbs from April given a recovery in prices.

Three OPEC+ sources said an output increase of 500,000 barrels per day from April looked possible without building up inventories, although updated supply and demand balances that ministers will consider at their March 4 meeting will determine their decision.

Oil Extends Losses as Texas Prepares to Ramp Up Output after Freeze
Oil prices fell for a second day on Friday, retreating further from recent highs, as Texas energy companies began preparations to restart oil and gas fields shuttered by freezing weather and power outages.

Texas refiners halted about a fifth of the nation’s oil processing amid power outages and severe cold.

Short-Term Outlook
All of these events are not likely to lead to a major change in trend as long as OPEC+ continues to control the supply and vaccination advances lead to increased demand. However, a price pullback would be more corrective in nature since prices are well above pre-pandemic levels at this time and ahead of the fundamentals.