Oil Market Snapshot – August 2022

  • Brent has started August below $100/bbl, with OPEC+ agreeing a tiny quota increase of 100,000 b/d, while US commercial inventories built, supported by SPR releases
  • We forecast global demand growth of 2.21 million b/d for 2022 (-120,000 b/d on previous), which would keep demand below 2019 levels for another year
  • Slowing global economic growth due to high inflation and high energy prices is hampering oil demand, with US and China seeing softer demand growth
  • We forecast global supply growth of 3.73 million b/d in 2022 (+250,000 b/d on previous), after the return of Libyan output to 1.2 million b/d and Russia’s current production recovery
  • Russian total oil production has reportedly recovered to 10.72 million b/d in July. While the EU has made transactions with Rosneft marginally easier, fuller sanctions will arrive YE22
  • OPEC+ are still cautious about increasing supplies, as any increase requires a delicate renegotiation of the deal and Saudi Arabia remains unwilling to tap limited spare capacity
  • Cuts on the OPEC side are now fully unwound, with production back to February 2020 levels
  • We se...

    Please log in to view
    the rest of this report.


    Not yet a subscriber?
    Contact us today!

    If you do not yet have an account with us and would like to register or find out more, please contact us using our client services form, send an email to admin@petrologica.com or call us on +44(0)1206 823 295.

Oil Market Snapshot – July 2022

  • July starts with Brent trading c. $111/bbl, down $6/bbl against the start of June, after yet another volatile month as tight supply and recession concerns do battle
  • We forecast global demand growth of 2.33 million b/d for 2022 (-50,000 b/d on previous), which would keep demand below 2019 levels for another year
  • China's lockdowns continue to hamper demand, but the country is stocking up on discounted Russian crude, while US demand growth slows as inflation hits a 40 year high
  • We forecast global supply growth of 3.5 million b/d in 2022 (+500,000 b/d on previous), recalibrating Russian production upward due to weakening efficacy of Western sanctions
  • Russian production has reportedly recovered to c. 9.8 million b/d, though it remains to be seen how temporary this is
  • Major outages in Libya and Ecuador take 850,000 b/d off the market, while Saudi increases fail to keep pace with quotas
  • OPEC+ will end its current quotas a month early, and will now have to negotiate its next phase as soon as 3rd August
  • It will be a tricky negotiation for Saudi Arabia, as the Kingdom attempts to steer between its...

    Please log in to view
    the rest of this report.


    Not yet a subscriber?
    Contact us today!

    If you do not yet have an account with us and would like to register or find out more, please contact us using our client services form, send an email to admin@petrologica.com or call us on +44(0)1206 823 295.

Oil Market Snapshot – June 2022

  • The EU has agreed direct and secondary sanctions on Russian oil, pushing prices toward $120/bbl
  • We forecast global demand growth of 2.38 million b/d for 2022 (-260,000 b/d on previous), which would keep demand below 2019 levels for another year
  • China's lockdowns have hurt demand there, but pent-up demand may now add to a tight market in the high demand summer season
  • We forecast global supply growth of 3 million b/d in 2022 (-970,000 b/d on previous), with non-US non-OPEC production declining due to lost Russian production
  • We see Russia losing 2.8 million b/d by YE22, when the sanctions are fully in place, and few alternative sources of supply
  • OPEC+ has signalled continuing with the existing agreement, but there are rumours the group is considering an exemption for Russia
  • We consider this difficult to achieve by the meeting on 2nd June, but more plausible for later meetings
  • We see a deficit of 1.83 million b/d in 2022 (650,000 b/d larger than previous) leaving the market very tight and consumer countries hoping for the Iran deal to be resolved soon
...

Please log in to view
the rest of this report.


Not yet a subscriber?
Contact us today!

If you do not yet have an account with us and would like to register or find out more, please contact us using our client services form, send an email to admin@petrologica.com or call us on +44(0)1206 823 295.

Oil Market Snapshot – April 2022

  • Brent ends April trading at c. $109/bbl after another turbulent month
  • We forecast global demand growth of 2.64 million b/d for 2022 (-300,000 b/d on previous)
  • This follows a major downgrade to global economic growth from the IMF, on the basis of Russia's invasion of Ukraine and persistent lockdowns in China
  • Ongoing inflation and supply chain issues combine with the direct effect of the war on the economies of Russia, Ukraine, and Europe more widely
  • We forecast global supply growth of 3.97 million b/d in 2022 (-71,000 b/d on previous), as Russia's production losses become more concrete
  • With the OPEC+ deal ending in September, the group will maintain its schedule until then barring a desperate market shortage
  • A coordinated stock release between the US and other IEA members should add 1.3 million b/d over six months, but Russian losses may reach as high as 3 million b/d month to month
  • Averaged over the whole year, the country will lose at least 1 million b/d of crude, and likely more
  • We see a deficit of 860,000 b/d in 2022 (410,000 b/d larger than previous) as Russia's productio...

    Please log in to view
    the rest of this report.


    Not yet a subscriber?
    Contact us today!

    If you do not yet have an account with us and would like to register or find out more, please contact us using our client services form, send an email to admin@petrologica.com or call us on +44(0)1206 823 295.

Oil Market Snapshot – March 2022

  • Brent is trading around $114/bbl at the end of the most volatile month in the contract's history. The last thirty days have seen prices as high as $139/bbl and below $100/bbl
  • The extreme volatility sees us suspend our price forecast. The EIA forecasts an average price of $105.05/bbl for 2022 (+$22.09/bbl on previous)
  • We forecast global demand growth of 2.94 million b/d for 2022 (-610,000 b/d on previous), lowered as a result of lockdowns in China and the prospect economic turmoil from the war
  • This leaves global annual average demand below 2019's level for a third year, with inflation still a downside risk as OECD nations indiscriminately cut fuel taxes, supporting demand
  • We forecast global supply growth of 4.68 million b/d in 2022 (-1.13 million b/d on previous), with around half the change due to lost Russian production
  • Though sanctions will not end if the war does, self-sanctioning may be reduced from its current levels
  • The meeting of March 31st is again likely to see no change to the OPEC+ schedule, with the key Gulf members stating their support for keeping Russia in the group
  • So far...

    Please log in to view
    the rest of this report.


    Not yet a subscriber?
    Contact us today!

    If you do not yet have an account with us and would like to register or find out more, please contact us using our client services form, send an email to admin@petrologica.com or call us on +44(0)1206 823 295.

Oil Market Snapshot – February 2022

  • Russia's invasion of Ukraine sent Brent to $105/bbl. It trades now at c. $103/bbl after the imposition of sanctions, with the prospect of high prices for the foreseeable future
  • We forecast global demand growth of 3.55 million b/d for 2022 (-150,000 b/d on previous), with demand finally exceeding 2019's level
  • Inflation remains a downside risk, running above 7% in the US currently, while China's zero tolerance policy on COVID has also impacted its growth
  • We forecast global supply growth of 5.81 million b/d in 2022(-40,000 b/d on previous), based on OPEC+ sticking to its scheduled unwind of its cuts deal
  • The meeting of March 2nd is likely to see the group maintain its schedule, with the Ukraine situation only potentially impacting policy if Russian production is materially affected
  • In such a case, Saudi Arabia's instinct to stabilise the market by covering lost production would have to be tempered by avoiding being seen to take Russia's market share
  • Major oil companies have booked high free cash flow, with capex remaining low and prices high. But much of the windfall is being returned to shareholders

    Please log in to view
    the rest of this report.


    Not yet a subscriber?
    Contact us today!

    If you do not yet have an account with us and would like to register or find out more, please contact us using our client services form, send an email to admin@petrologica.com or call us on +44(0)1206 823 295.