Shale Oil Growth Expected to Slow
November 14th, 2019
The API inventory report said that crude oil stocks were down 541,000 barrels and the stocks of crude oil at Cushing, Ok were down 1.2 million barrels. The outlook for crude stocks in today’s DOE report from the Reuters survey is for stocks to be up 1.6 million barrels. Gasoline stocks were up by 2.3 million barrels and that compares with the outlook for today number to show gasoline to be down 1.2 million barrels. Distillate stock in the API report were up 887,000 barrels and the outlook for today’s DOE number is for stocks to be down 950,000 barrels.
OPEC’s Secretary General, Mohammad Barkindo, said he is confident that the US and China would reach a trade deal and that it would remove a “dark cloud” over the oil market. He said it is premature to discuss the December OPEC and non-OPEC output policy decision and it is too early to say if further output cuts would be needed. He said OPEC and its non-OPEC partners need to continue working together to weather uncertainties and are committed to doing so. He said US shale oil supply growth could fall next year. He said there would likely be downward revision of supply going into 2020 especially from US shale, adding that some US shale oil firms see output growing by only about 300,000 to 400,000 bpd. Separately, OPEC’s Secretary General said Saudi Arabia has reassured the exporting group that listing of Saudi Aramco would not affect the country’s role in the group or commitment to output deals.
According to Energy Intelligence, the growth of shale oil will likely continue at a slower pace than previously estimated as WTI continues to trade in the $50-$55 per barrel range, down about $10 per barrel from expectations earlier this year. Total annual crude output growth estimates for the US 2020 have been cut from 1 million bpd to around 750,000 bpd. Shale producers such as Pioneers Natural Resources, Diamondback Energy and Concho Resources are now expecting 2020 crude growth production rates closer to 10% or less, down from earlier plans of 20%+ growth. However, the relatively subdued pace of growth does not signal the beginning of the end for shale growth. It instead slows the rush and pushes any peak shale date further into the future.
The estimates for the propane inventory report today are for a draw of 810,000 barrels.