EIA Releases Energy Outlook
August 12, 2020
The API inventory report was bullish with draw across the board and in most cases bigger than expectations. Crude was down 4.4 million barrels and the crude stocks at Cushing, Ok were up 1.1 million barrels. Gasoline stocks were down 1.3 million barrels and distillates were down 2.9 million barrels.
Bloomberg estimates for today EIA inventory update on average are looking for crude oil stocks to be down 2.523 million barrels, gasoline stocks down 552,000 barrels and distillates down 424,000 barrels. The stocks turned lower late in the day yesterday as the possibility of the passage of another round of stimulus looked like it would drag on.
The EIA’s Short Term Energy Outlook showed that the agency raised its 2020 world demand growth forecast by 40,000 bpd to decline of 8.11 million bpd on the year. It also raised its forecast for 2021 world oil demand growth by 30,000 to an increase of 7.02 million bpd on the year. Global petroleum liquid fuels demand will average 93.1 million bpd in 2020. Global petroleum production will average 91.8 million bpd in the second quarter of 2020, down 8.6 million bpd on the year. It is estimated that global supply of oil continues to decline to 90.4 million bpd in the third quarter before increasing to an annual average of 99.4 million bpd in 2021. The EIA reported that US crude oil production is expected to fall by 990,000 bpd in 2020 to 11.26 million bpd, a steeper decline than its previous estimate of a fall to 600,000 bpd. US oil production in 2021 is estimated to fall to 11.1 million bpd. It expects US petroleum and other liquids fuel consumption to fall by 2 million bpd to 18.46 million bpd in 2020, a slightly smaller decline than its previous forecast for a drop of 2.12 million bpd. The EIA expects the monthly Brent spot prices to average $43 per barrel during the second half of 2020 and increase to an average of $50 per barrel in 2021.
Over the weekend, the Saudi Aramco CEO stated that there was a strong rebound in crude oil demand in major market including pre-COVID-19 level for gas and diesel in China, which is the largest importer of crude oil. Saudi Aramco, the state owned oil company, net income fell by 50% in the first half of 2020.
Russia’s President, Vladimir Putin, said the Russia had become the first country in the world to grant regulatory approval to a COVID-19 vaccine after less than two months of human testing. The vaccine still has to complete final trials, raising concerns among some experts at the speed of its approval, but the Russian business conglomerate Sistema has said it expect to put it into mass production by the end of the year.
The S&P Global Platts survey found OPEC+ production discipline slipped in July as Gulf members led by Saudi Arabia ended their voluntary extra output cuts. Quota compliance fell to 96% for the month versus a 106% compliance in June with its collective production increasing by 1.1 million bpd. OPEC+ output is set to rise even further in August, with the coalition hiking its quota by about 2 million bpd, but actual production increases are expected to be lower given by so-called compensation cuts pledged by members that over produced their quotas in May, June and July.