- Brent has risen steadily to over $45/bbl from a 12-year low of $26.01/bbl in January, boosted mainly by continued decline of US LTO production and better than expected oil demand growth, and only hampered very briefly by the collapse of Russo-OPEC negotiations on a production freeze
- Iran hopes to increase oil production to pre-sanction levels, but political uncertainty could deter foreign investors; we expect OPEC to bring 2 million b/d new production capacity between 2016 and 2020
- Capex cuts from US LTO producers are accelerating the decline of LTO production, likely by more than 1 million b/d during 2016 and 2017 with non-OPEC production to decline by more than 0.6 million b/d in total this year
- Global oil demand still remains robust at a projected 1.4 million b/d in 2016, though lower than 2015’s 1.8 million b/d; China accounts for c. 36% of global demand growth, led by transportation fuel consumption which we expect to grow by 0.5 million b/d in both 2016 and 2017; India is also expected to add 0.35 million b/d in 2016
by Yue Pan // 22 May, 2016
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