European Commission Forecasts Record Economic Contraction in 2021
July 8, 2020
The API inventory report had crude oil stocks up 2 million barrels and the stocks at Cushing were up 2.2 million barrels. Gasoline stocks were down 1.8 million barrels and distillate stocks were down 900,000 barrels.
Average estimates for today’s DOE inventory update from the Bloomberg survey are looking for crude stocks to be down 3.189 million barrels, gasoline stocks down 218,000 barrels and distillates to be down 127,000 barrels. This market is settling into a range as the reports of increasing cases of the virus bring uncertainty to the recovery and demand. It will likely take a big surprise in the inventory report to get this market out of its range.
In its Short Term Energy Outlook, the EIA reported that it raised its 2020 world oil demand growth forecast by 190,000 bpd to 8.15 million bpd. World oil consumption forecast to total 92.89 million bpd. However, it cut its oil demand growth estimate for 2021 by 190,000 bpd to 6.99 million bpd. The EIA reported that OPEC production in 2020 is expected to fall by 3.82 million bpd to 30.85 million bpd, while OPEC production in 2021 is expected to increase by 3.05 million bpd. Non-OPEC oil production in 2020 is expected to fall by 2.24 million bpd to 63.74 million bpd, while out in 2021 is expected to increase by 1.11 million bpd to 64.85 million bpd. it expects US petroleum and other liquid fuel consumption to fall 2.1 million bpd to 18.34 million bpd in 2020, a smaller decline than its previous forecast for a fall of 2.4 million bpd. US oil demand in 2021 is expected to increase by 1.6 million bpd to 19.94 million bpd, compared with a previous estimate for an increase of 1.4 million bpd. It reported that US oil production is expected to fall by 600,000 bpd in 2020 to 11.63 million bpd, a smaller decline than the 670,000 bpd it forecast previously . For 2021, US crude production is expected to fall by 620,000 bpd to an average of about 11.01 million bpd after falling under 11 million bpd during the second quarter. In regard to prices, the EIA expects monthly Brent sport prices will average $41 per barrel during the second half of 2020 and increase to an average of $50 per barrel in 2021, $4 per barrel and $2 per barrel higher than forecast in last month’s report. WTI crude oil price are expected to remain less than $50 per barrel through 2021.
The outlook for the propane inventory report today is to see a build of 2.3 million barrels. There have been several reports of strong exports which could led to a smaller build in stocks. This idea may have been what helped propane trade higher yesterday.
Reuters reported that Iran has cut its crude oil production to its lowest level in 40 years. Its June oil output is estimated to be around 1.9 million bpd, while exports are around 220,000 bpd. Total onshore crude stocks are estimated to be 63 million barrels roughly 85% of available storage capacity. They are also reporting that Iran’s floating is also filling up with estimated 30 tankers being used to store oil.
The European Commission forecast the 19 nation euro zone economy would contract a record 8.7% this year before rising 6.1% in 2021.