Tag: oil

After the US decided to withdraw from the Joint Comprehensive Plan of Action regulating Iran’s nuclear activities, there is a change in the the focus of oil market analysis from the fundamentals to geopolitics. There is a 180-day period for customers to adapt their purchasing strategies and it remains to be seen other aspects of the sanctions will be implemented. When sanctions were imposed, Iran’s exports fell by about 1.2 mb/d. Namely, EIA said: It is too soon to say what will happen this time, but we should examine whether other producers could step in to ensure an orderly flow of oil to the market and offset a disruption to Iranian exports. However, neither Venezuela nor Mexico can raise output in the short term, but some of the 1.5 mb/d that have been reduced by other producers under the Vienna Agreement might be available to keep markets well supplied. In Venezuela, the decline of oil production is accelerating and by the end of this year output could have fallen by several hundred thousand barrels a day. The possible supply shortfall by Iran and Venezuela could cause a major challenge for producers to diverge from sharp price rises and fill the ...

EIA said that US crude oil exports averaged 1.1 million barrels per day in 2017 and 1.6 million b/d so far in 2018, an increase from less than 0.5 million b/d in 2016. This increase happened despite the fact that US Gulf Coast onshore ports cannot fully load Very Large Crude Carriers. Instead, export growth was achieved using smaller and less cost-effective ships.

Morgan Stanley noted that crude oil prices will reach $90 a barrel by 2020 as the 2020 sulphur cap on shipping emission come into force. The changes will increase demand for distillate products such as diesel and marine gasoil, driving up the need for crude oil. The refining industry will need to produce more "green" fuels.

EIA’s May Short-Term Energy Outlook predicts that Brent crude oil prices will average $71 per barrel in 2018, $7/b higher than last month’s STEO. EIA’s forecast for regular gasoline retail prices increased to an average of $2.79/gallon in 2018, $0.15/g higher that in last month’s STEO. Monthly average Brent crude oil spot prices have increased in 9 of the past 10 months.

Oil market has been shaped by strong growth in demand, compliance by countries party to the Vienna agreement to cut output, and the crisis in Venezuela, leading to tighter overall market conditions. The restoration of sanctions on Iran, which exports 2.5 million barrels of oil a day and is the world’s fifth-largest exporter, may affect the market balance.

Oil prices decreased on Thursday 3 of May, as a rise in US crude inventories and a record weekly US production was reported, This increase is opposing to the efforts made by OPEC to decrease supplies and tighten the market. The prices were reduced after a report by EIA, which showed that US crude inventories increase by 6.2 million barrels to 435.96 million barrels.

The World Bank expects oil prices to average $65 a barrel over 2018, increasing from $53 a barrel in 2017. This will be caused by strong demand from consumers and a simultaneous restraint by oil producers. Metals prices are expected to rise 9% in 2018, because of the same reasons. Prices for energy commodities, including oil, natural gas, and coal, will increase by 20% this year.