Global Supply/Demand Imbalance Cut in Half for May as Storage Space Remains Tight
Energy research firm Rystad Energy said the global imbalance between oil supply and demand, which has increased oversupply to 26.4 million B/D in April, is set to fall by half to 13.6 million B/D in May and even further to 6.1 million B/D in June.
Even with the drop, the growth in inventory will still overwhelm remaining global storage, which is about 90% full and expected to fill in weeks.
With the imbalance between supply and demand set to fall, Rystad added that global supply is expected to fall to 92.8 million B/D in May, compared with 98.3 million bpd in April. A further decline to 91.1 million B/D is expected in June, the lowest level in 2020 unless further production cuts are announced. Output is expected to rebound in July.
Four-hundred-million bbl of available global crude storage remains, according to the firm, and crude stocks are forecast to build by 13.6 million B/D on average in May. Demand is estimated to reach its lowest point at 71.8 million B/D in April before rising to 79.2 million B/D in May, and increase further to 85.1 million B/D in June as governments ease COVID-19-related restrictions and industrial activity restarts.
Until the demand-supply gap becomes more balanced by additional shut-ins (possibly even within OPEC+ countries), Rystad said further downward pressure on oil price is likely. If adequate levels of production are not shuttered by 19 May—the expiration of the WTI June 2020 contract—the potential remains for another price collapse for WTI crude prices.
A price recovery is possible as early as June, though with risk for a tight market in 2022 and prices much higher than pre-crisis levels. Such an upswing and recovery would be facilitated by demand moving above pre-COVID-19 levels in 2022, ongoing OPEC+ cuts, and a loss of supply capacity in both US shale and long-cycled global production.
US Agencies Advance Research To Increase Gulf of Mexico Production
The research will focus on potential policy changes that could help increase oil and gas production from deepwater infrastructure already in place in the Gulf of Mexico to reduce stranded assets.
Economic Downturn Underlines Key Risks for Midstream Operators
An economic downturn and global pandemic are among many issues US midstream operators are dealing with in 2020, including exposure to upstream bankruptcies, limited M&A activity, and regulatory issues.
Another 150 North American E&Ps May Require Chapter 11 Protection Through 2022
Several E&P and OFS companies have already filed for Chapter 11, but unless prices strengthen the total number of filings could be as high as 190 by 2022.
Don't miss out on the latest technology delivered to your email every two weeks. Sign up for the OGF newsletter. If you are not logged in, you will receive a confirmation email that you will need to click on to confirm you want to receive the newsletter.
21 September 2020
22 September 2020
17 September 2020
16 September 2020
21 September 2020