Today's Webinar - May 18

[dan_s]

I urge all of you to join me on today's EPG webinar that is being hosted by Ring Energy (REI), a small-cap that is heavily weighted to oil.

Last week's news that impacted oil prices:

On May 12 Reuters reported oil demand is already outstripping supply and the shortfall is expected to widen even if Iran boosts exports as vaccinations against COVID-19 bolster the global economy, the International Energy Agency (IEA) said on Wednesday. "The anticipated supply growth through the rest of this year comes nowhere close to matching our forecast for significantly stronger demand beyond the second quarter," the IEA said in its monthly report, citing increased pumping from OPEC+ countries. Output from the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, the so-called OPEC+ group of producers, lagged demand by around by 150,000 barrels per day (b/d) in the second quarter, IEA said. That shortfall is expected to widen to a 2.5 million b/d by year's end, the Paris-based watchdog said.

OPEC+ producers have been curbing output since 2017 but have eased since imposing record high cuts last year, with more easing agreed from this month. "The widening supply and demand gap paves the way for a further easing of OPEC+ supply cuts or even sharper stock draws," the IEA said, noting that storage of oil had ebbed to nearly the five-year-average after soaring amid the pandemic. Getting inventories back down to the five-year average was, along with supporting prices, one of the aims of the OPEC+ cuts to begin with. Iran's possible full reentry into the oil market, if indirect U.S.-Iranian nuclear talks succeed, would still leave production from OPEC+ producers at 1.7 million b/d short of demand, it added.

Supply recovery outside OPEC+ was recovering more slowly than the IEA expected as the virus delayed projects in Brazil and the Gulf of Mexico and hampered maintenance in Canada. While new waves of infections in Brazil and Thailand and even India - the world's third-largest consumer suffering record-breaking cases - were not enough to derail the trend but could continue to affect the market, it added. "India's COVID crisis is a reminder that the outlook for oil demand is mired in uncertainty. Until the pandemic is brought under control, market volatility is likely to persist."

On May 11 Reuters reported U.S. crude oil production is expected to fall by 290,000 barrels per day (b/d) in 2021 to 11.02 million b/d, the U.S. Energy Information Administration (EIA) said on Tuesday, a steeper decline than its previous forecast for a drop of 270,000 b/d. U.S. oil producers have been gradually increasing drilling activity as oil prices have rebounded but output growth has been muted as investors pressure companies to rein in spending and focus on returns. In 2022, output is expected to rise by 820,000 b/d to 11.84 million b/d, unchanged from the EIA's estimate last month. "Because the average price of West Texas Intermediate crude oil remains above $55 per barrel in our forecast, we expect producers will drill and complete enough wells in the coming months to offset declines at existing wells," the agency said in a monthly forecast. The EIA said it expects U.S. petroleum and other liquid fuel consumption to rise 1.39 million b/d to 19.51 million b/d in 2021, compared with a previous forecast for a rise of 1.32 million b/d. The agency expects that gasoline consumption in the United States will average almost 9 million b/d this summer, between April and September, which is 1.2 million b/d more than last summer but almost 600,000 b/d less than summer of 2019. For 2022, U.S. consumption is forecast to rise 1.02 million b/d to 20.53 million b/d, higher than its previous estimate for an increase of 980,000 b/d.

On May 12 Bloomberg reported that global flight departures increased by over 200 week-on-week at the airports tracked by Bloomberg, with the U.S. leading growth. Passenger numbers at U.S. airports jumped 8% since last week, averaging more than 1.5 million passengers each day.

On May 12 CNBC reported that the European Commission now foresees a gross domestic product growth rate of 4.2% for the EU in 2021 and 4.4% for next year. In February, it said GDP growth would be 3.7% this year and 3.9% in 2022.