global oil overview and outlook...1. global oil overview & outlook –sophie udubasceanu 2....
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Global oil overview and outlook
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1. Global oil overview & outlook – Sophie Udubasceanu
2. North Sea developments – Richard Price
3. Insight into the US oil market – Ignacio Sotolongo
4. Oil products outlook – Michael Connolly
5. Focus on the US naphtha market – Michael Sims
6. Q&A
Agenda
30/09/2020 2Global oil overview and outlook
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World Crude Report
330/09/2020 Global Oil Overview and outlook
• Round the clock coverage
• 3 daily updates
• Physical and futures market pricing
• Assessments at 5 daily timestamps
• Market 7-day outlook and editorial features
• Regional physical sections:
• Asia Pacific, Arab Gulf, North Sea, West Africa, Mediterranean, CIS and Americas
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Crude oil overview & outlook
4
Sophie Udubasceanu
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- 30 m bbl/day of demand
5
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A three-pronged attack from Coronavirus
6
Fall in oil and energy
demand
Travel: Lockdown leads to reduced flights, car usage. Started off with China and spread swiftly across the world01
Industry: Many factories, heavy industry and construction, including a reduced refining activity02
Economy: World could enter recession; China’s GDP growth rate for 2020 revised down while other countries also followed suit. Most governments rolled out economic relief packages
03
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“No prospect of demand returning to the historical average during the remainder of 2020”
IEA
Demand threat
30/09/2020 7
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OPEC production
8
More than 24m bbl/day
-7.7m bbl/day
The OPEC+ agreement cameinto force on 1 May
30/09/2020 Global oil overview and outlook
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5
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Sep-2019 Oct-2019 Nov-2019 Dec-2019 Jan-2020 Feb-2020 Mar-2020 Apr-2020 May-2020 Jun-2020 Jul-2020 Aug-2020
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OPEC Production
Algeria Angola Ecuador Equatorial Guinea Gabon
Iran Iraq Kuwait Libya Nigeria
Qatar Saudi Arabia United Arab Emirates Venezuela
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US oil rig count weakening
9
179US oil rig count down from 562 in April
10.7m bbl/dayUS Oil production
5 m
6 m
7 m
8 m
9 m
10 m
11 m
12 m
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In b
bl/
day
US Rig count (Baker Hughes) US Oil production (EIA)
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The sustainability transformation
1030/09/2020 Global Oil Overview and Outlook
Bio-diesel Bio-gasoline Bio-Jet
Sustainable oil products
Traditional refinery
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Oil Supply Outlook
11May 2020
Global oil overview and outlook
Source: OPEC+, EIA
The US supply forecast decrease is vs the January 2020 oil production figure
Source: CDI, part of ICIS
Revised forecast: world oil use to rise to
96.7 MMB/D next quarter before decreasing
seasonally to 95.6 MMB/D during the first
quarter of next year.
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12
2nd
WaveWill the impact be localised?
• Concerns over a recession
• Will global economies recover over the the next few months?
• Extent of a second Covid-19 wave in October
• How will this impact oil demand?
• Double dip in Chinese demand
• Difficult in restarting when other countries continue to have
restrictions
• Demand improvement
• Jet fuel demand, Long term consequences
Market outlook
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13
Electrification
Key factors to watch
30/09/2020 Global oil overview and outlook
EconomyThe threat of a global recession
The sustainability movement
• How the dispute will progress?
• Reaction to theUS presidentialelections
• Is the deal enough?
• Improvement in demand could ease the oversupply
Demand OPEC+
US-ChinaUS
election
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North sea developments
14
Richard Price
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North Sea CIF cargoes
15Date Presentation title
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North Sea CIF cargoes
16Date Presentation title
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Insight into the US oil market
17
Ignacio Sotolongo
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Top five oil producing countries (2019)
1830/09/2020 Global crude oil overview and outlook
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The ChallengeA Perfect Storm
US Crude Oil Production
US Crude Oil -Import/Export
US/China Trade Agreement
Trade Agreement – Phase 1
US PRESIDENTIAL ELECTIONS
The Candidates
Key challenges in Q4 2020
19Global crude oil overview and outlook
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The US shale oil industry
20Date Presentation title
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Top 10 importing countries in 2020
21Date Presentation title
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Top 10 importing countries in 2020
2230/09/2020 Global crude oil overview and outlook
Crude imports in k bbl/day
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Overview of the US pipeline sector
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Typical products from a 42-gallon Barrel of Crude Oil
2430/09/2020 Global crude oil overview and outlook
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25Date Presentation title
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Top 10 importing countries in 2020
26Date Presentation title
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TrumpRepublican candidate
BidenDemocrat candidate
27Date Presentation title
vs
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US crude stocks continue to swell
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494m bblHurricane Laura impacted oil injections
10.7m bbl/dayUS Oil production
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TrumpRepublican candidate
BidenDemocrat candidate
29Date Presentation title
vs
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Top 10 importing countries in 2020
30Date Presentation title
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Oil products outlook
31
Michael Connolly
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The impact of COVID-19 will continue through 2021 as cities, regions and entire countries have further waves, resulting in lockdowns
Reduction in Gasoline / Jet / Diesel demand on average from 2019 in first 7 months of 2020
RecoveryIn 2021 broadly expected gas/diesel to be relatively flat or declining compared to “recent month” levels. Jet will continue to recovery at a slow pace
9 Mbbl/dKey Product Demand 2020 vs. 5 yr. Average
Source: ICIS Analytics, local Gov’t data;
Based on sample of countries totalling c.70% of total demand in each product
Product YTD Recent MonthEstimated
Mbbl/d reduction
Gasoline 87% 93% -3.3
Jet 64% 53% -2.8
Diesel 91% 95% -2.5
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Focus on the US naphtha market
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Michael Sims
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Naphtha’s place in the value chain
RefineryCrude Oil
Heavy Naphtha
Light Naphtha
Gasoline
Petrochemicals
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Supply outpaces demand before and after coronavirus
-Coronavirus demand
shock and crude oil crash
temporarily increase
attractiveness of naphtha
as cracking feedstock
-Exports soar on low US
prices
-Recovering crude buoys
prices, subdues exports
Contracts at 18-year low
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US Stream Cracking Margins
Source: ICIS Margin Analytics
-After brief uptick in Q2/Q3,
Naphtha’s share of US
steam cracking feedslate
falls to record low (between
2 and 3 percent)
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US Exports to Asia Soar in H1 2020
Source: ICIS Supply and Demand
-A wide arbitrage window
and surging demand in Asia
resulted in record export
volumes in H1.
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Main drivers
385 October 2020 La Volatilidad del petróleo
Outlook - Global Oil Markets
Demand
OPEC+
LockdownEconomy
US
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Thanks for listening. Questions?
For further questions, please send market enquiries to:
Sophie Udubasceanu
Global Oil Editor
T: +44 (0) 20 7911 1889
Richard Price
Deputy Global Oil Editor
T: +44 (0) 20 7911 3118
Ignacio Sotolongo
Senior Oil Editor
T: +1 832 404 3710
Michael Connolly
Senior Consultant
T: +44(0)7816 547234
Michael Sims
Markets reporter
Feedstocks & Olefins
T: +1 713 569 8659