U.S. Crude Production Forecast to Rise in 2020
February 12, 2020
The inventory report put out by the API was released yesterday late afternoon and it called crude oil stocks up a huge 6.0 million barrels compared to the estimates for today’s DOE number of up 3 million. Stocks of crude oil at Cushing, Ok were also up big at 1.3 million barrels. Gasoline stocks were up 1.1 million barrels, compared with the outlook for today’s DOE Report of stocks up 546,000 barrels. Distillates were down 2.3 million barrels, compared with the outlook for a decline of 557,000 barrels in today’s DOE update.
The Bloomberg average estimates for today’s DOE inventory is crude up 3.135, gasoline up 512,000 and distillates down 721,000.
The EIA said yesterday that they are forecasting US crude oil production to rise by 960,000 bpd in 2020 to a record 13.2 million bpd, this is below the previous estimated of a 1.06 million bpd increase. Output is expected to increase by 360,000 bpd to 13.56 million bpd in 2021, compared with a previous estimate of an increase of 410,000 bpd. This is not good news for OPEC if the US can continue to produce at these levels.
The EIA forecast Brent crude oil prices will average $61 per barrel in 2020 and $68 per barrel in 2021.
The above was from the EIA’s Short-Term Energy Outlook. Here are some of the other stats on energy. The EIA cut their 2020 world oil demand growth forecast by 310,000 bpd to 1.03 million bpd. It increased its oil demand growth estimates for 2021 by 140,000 bpd to 1.52 million bpd. Total world oil demand is forecast to total 101.74 million bpd in 2020 and 103.26 million bpd in 2021. The EIA reported that OPEC’s oil production is expected to fall by 850,000 bpd to 28.93 million bpd in 2020 and increase by 280,000 bpd to 29.21 million bpd in 2021., while non-OPEC production is expected to increase by 2.53 million bpd to 67.98 million bpd in 2020 and by 800,000 bpd to 68.78 million bpd in 2021.
US petroleum demand is expected to increase by 90,000 bpd to 20.53 million bpd in 2020, compared with a previous estimate of an increase of 160,000 bpd, while demand in 2021 is expected to increase by 180,000 bpd to 20.71 million bpd, compared with a previous estimated increase of 70,000 bpd.
Gasoline demand in 2020 is expected to fall by 20,000 bpd to 9.26 million bpd and by 50,000 bpd to 9.21 million bpd in 2021. Distillate demand is expected to increase by 10,000 bpd to 4.07 million bpd in 2020 and increase by 50,000 bpd to 4.12 million bpd in 2021.
Rystad Energy predicted that the coronavirus outbreak will significantly limit the growth in global oil demand this year compared to earlier forecast. It predicts global oil demand will increase by 820,000 bpd in 2020 down from a December forecast of 1.1 million bpd. It said the outbreak will primarily affect demand in the early part of the year, with the first quarter now expected to see growth of just 100,000 bpd, before consumption recovers later in the year.
Sources familiar with Saudi Arabia’s thinking stated that the country want global oil producers to agree to a quick oil supply cut as China’s coronavirus cuts demand. Saudi Arabia has been working to convince OPEC producers and its allies led by Russia that they need to act sooner rather than later. The sources said it sees a potentially larger impact on oil demand this time than the 2002-2003 Severe Acute Respiratory Syndrome(SARS) epidemic due to China’s now far larger role in the global economy. The sources said the Saudis want to be proactive and to keep oil prices at $60 per barre or above.
Goldman Sachs has downgraded China’s GDP growth forecast to 5.2% from 5.8%.
The markets have rebounded the last few days as China reports its lowest increase in new cases of the coronavirus since January 30. This has created some optimism that the virus outbreak is peaking, and this has caused bottom pickers to jump in and buy after the sever sell off these markets have seen. The oversold nature of energy prices certainly lends itself to a corrective bounce and right now that is all you can call any advance until key resistance levels are broken on the upside and those levels will require these buyers to do some heavy lifting to break those levels.