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Oil Markets Update - June 2017

IM Research
By IM Research
7 years ago
Oil Markets Update - June 2017

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  1. July 03 , 2017 Oil Markets Update – June 2017 Benchmark crude prices continue to trade in range bound (USD 45 - 50/bbl) Crude prices continue to decline in June, averaging at USD 47.6/bbl for the month (-8% MoM and -5% YoY), as higher US production continue to outweigh the extended reduction in OPEC supply. Also, OPEC production was 280k bpd higher MoM in June, with both Libya and Nigeria boosting back their production, a Reuter’s survey showed. According to Baker Hughes latest weekly rig count (30, June, 2017), US rig count reached 940, down by one rig week on week and higher by 509 rig than last year. US production reached 9.25mn bpd in the week ending 23, June, 2017. WTI price averaged at USD 45.3/bbl in June, down 7.7% MoM and 13% lower YoY. Demand IEA forecasts unchanged global crude demand growth at 1.3mn bpd for 2017. In 2018, crude demand is expected to reach 99.3mn bpd with an estimated growth of 1.4mn bpd. Oil Markets Update According to OPEC monthly report, global oil demand is projected to grow by 1.27mn bpd, and to average at 96.38mn bpd in 2017. Oil demand forecast for China (0.34mn bpd) and India (0.12mn bpd) remained unchanged for the year. Demand for OPEC crude is seen to average at 32mn bpd in 2017, 0.3mn bpd higher than a year before. Supply IEA forecasts 2017 world oil supply growth to be 1.25mn bpd higher than a year ago, with gains mainly coming from non-OPEC, backed by higher US production. In May, data showed 585k bpd growth in global crude supply, with higher supply from both OPEC and non-OPEC producers. May’s OPEC production in particular, was up 290k bpd MoM, reaching 32.08mn bpd, with the stronger production from Libya and Nigeria which are (both exempted from the crude supply cuts). YTD OPEC cut compliance remained solid at 96%. OPEC monthly report showed, non-OPEC supply averaging at 58.14mn bpd, with a 0.84mn bpd growth in 2017. Russia, Brunei, Sudanis and Kazakhstan witnessed lower output, following the OPEC and non-OPEC extended production cut deal. Also, OPEC revised down its US oil supply projection by 30k bpd in 1Q17, due to lower than expected output. SICO Research Contents Price monitor 3 Global Oil Demand and Supply Estimates 4 Oil Demand Trends 5 Oil Supply Trends 6 OPEC Spare Capacity and OECD Commercial Inventory 7 OPEC Production 8 Raneem Seroor Country wise Production Trend 9 +973 17515000 (Ext.5096) US Product Inventory Raneem.seroor@sicobahrain.com © SICO 2017 All Rights Reserved Attention is drawn to the disclaimer and other information on Page 11 11
  2. SICO RESEARCH Oil Markets Update Price monitor Exhibit 1 : Price Monitor Cur r e nt P r ic e Cr ude (U SD/bbl) 1 Mont h A go 6 /3 0 /1 7 46.0 47.9 45.4 52.2 WTI Brent OPEC Ref. Basket Arab Light Gas (USD/mmbtu) Nymex HH NBP Gas 2.9 4.7 1 Ye a r A go MoM% YoY% A v e r a ge P r ic e (YT D) 48.3 50.3 48.7 49.2 -5% -5% -7% 6% 48.3 49.7 46.3 47.2 -5% -4% -2% 11% 2017 50.1 52.8 50.3 51.1 3.0 4.8 -2% -2% 2.9 4.5 2% 5% 3.0 5.4 YoY% 2016 45.5 47.7 43.9 44.4 10% 11% 14% 15% 2.7 4.9 13% 10% Source: Bloomberg, SICO Research Exhibit 2: Prices: Historical (USD/bbl unless mentioned) 1Q14 2Q14 WTI 99 103 YoY(%) 5% 10% Brent 108 110 YoY (%) -4% 6% Nymex HH Gas (USD/mmbtu) 3.6 4.6 YoY (%) 3% 14% 3Q14 98 -8% 103 -6% 3.9 11% 4Q14 73 -25% 77 -30% 3.7 -3% 1Q15 49 -51% 55 -49% 2.9 -21% 2Q15 58 -44% 63 -42% 2.7 -41% 3Q15 46 -53% 51 -50% 2.7 -30% 4Q15 42 -43% 45 -42% 2.1 -44% 1Q16 33 -32% 35 -36% 2.0 -31% 2Q16 45 -22% 47 -26% 2.1 -22% 3Q16 45 -3% 47 -8% 2.8 4% 4Q16 49 17% 51 14% 3.0 44% 1Q17 52 56% 55 55% 3.0 52% 2014 93 -5% 100 -8% 4.0 6% 2015 49 -48% 54 -46% 2.6 -34% 2016 43 -11% 45 -16% 2.9 11% Source: Bloomberg, SICO Research Exhibit 3: Brent Oil Price in USD/bbl Exhibit 4: Nymex Natural Gas Price in USD/mmbtu 140 10.0 120 8.0 100 6.0 80 Source: Bloomberg Jan-17 Jul-16 Jan-16 Jul-15 Jan-15 Jul-14 Jan-14 Jul-13 Jan-13 Jan-12 Jan-17 Jul-16 Jan-16 Jul-15 Jan-15 Jul-14 Jan-14 Jul-13 0.0 Jan-13 20 Jul-12 2.0 Jan-12 40 Jul-12 4.0 60 Source: Bloomberg 2
  3. SICO RESEARCH Oil Markets Update Global Oil Demand and Supply Estimates Exhibit 5 : Global Oil Supply, Demand Comparison (mn bpd) EIA IEA OPEC Average 2017 Demand 98.5 97.8 96.4 97.5 Growth (mn bpd) 1.5 1.2 1.3 1.3 Growth (YoY %) 1.6% 1.2% 1.3% 1.4% Non-OPEC Supply 59.1 58.3 58.1 58.5 Growth (mn bpd) 0.9 0.7 0.8 0.8 Growth (YoY %) 1.6% 1.2% 1.5% 1.4% 2017 GDP Growth (%) 3.5% 3.4% 3.5% Source: IEA, EIA, OPEC Exhibit 6: Global Oil Supply & Demand Balance (mn bpd) Demand OECD YoY Non-OECD YoY Total Oil demand YoY Supply Non-OPEC YoY OPEC Crude YoY OPEC other liquids YoY Total Oil Supply YoY 2Q14 48.0 3.0% 44.9 -1.7% 93.0 1.2% 3Q14 48.0 2.8% 46.0 -0.8% 94.0 1.0% 4Q14 48.2 2.4% 46.4 -0.4% 94.6 1.4% 1Q15 47.8 0.5% 46.6 1.6% 94.4 1.6% 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 49.2 49.5 49.4 49.0 50.3 50.5 50.5 50.1 2.4% 3.1% 3.1% 2.6% 2.2% 2.0% 2.1% 2.2% 45.6 46.9 46.5 46.7 46.0 47.3 47.4 47.4 1.6% 2.0% 0.1% 0.2% 0.9% 0.7% 2.0% 1.5% 94.8 96.5 95.9 95.7 96.3 97.8 97.9 97.5 2.0% 2.6% 1.4% 1.4% 1.5% 1.4% 2.0% 1.9% 2014 45.8 -0.7% 46.2 2.4% 93.6 1.4% 2015 2016 46.4 46.9 1.3% 0.9% 47.8 48.7 3.4% 1.9% 95.4 96.9 1.9% 1.6% 56.8 4.8% 29.8 -2.6% 6.3 -1.5% 92.9 1.9% 57.4 4.3% 30.4 -0.1% 6.3 0.1% 94.2 2.5% 58.7 4.9% 30.7 3.6% 6.4 0.4% 95.8 4.2% 58.4 4.6% 30.5 1.4% 6.5 2.7% 95.4 3.4% 58.5 2.9% 31.5 5.6% 6.5 2.8% 96.5 3.8% 59.0 2.7% 32.0 5.1% 6.4 1.9% 97.4 3.4% 59.2 0.9% 31.9 3.9% 6.5 1.0% 97.6 1.9% 58.5 0.1% 32.1 5.1% 6.4 -1.0% 97.0 1.6% 58.2 -0.4% 31.9 -0.4% 6.7 3.7% 96.8 -0.2% 57.2 4.6% 30.3 0.1% 2.07 -4.2% 89.5 2.8% 58.8 2.8% 31.5 4.0% 1.46 -29.5% 91.7 2.5% 58.2 -1.0% 32.5 3.3% 1.15 -21.2% 91.9 0.1% OCED commercial inventories Demand Cover (Days) 2609 2680 54.3 55.9 103.3 97.8 2713 56.3 73.2 2746 57.5 48.5 2825 57.4 57.8 2897 58.5 46.4 2967 60.0 42.0 3036 3072 3099 3090 3101 62.0 61.1 61.4 61.2 61.9 33.2 45.4 44.9 49.1 51.8 2688 58.7 93.2 2970 64.0 48.7 2967 63.3 43.3 WTI Price (USD/bbl)-Average 57.6 -1.5% 32.3 2.5% 6.4 -0.4% 96.4 -0.1% 57.9 -1.8% 32.6 1.9% 6.5 1.0% 97.0 -0.4% 58.7 -0.8% 32.7 2.5% 6.5 0.1% 98.3 0.8% Source: EIA, SICO Research 3
  4. SICO RESEARCH Oil Markets Update Oil Demand Trends Exhibit 7 : Oil Demand- OECD vs Non- OECD (mn bpd) OECD Demand) Non-OECD Demand OECD growth(%)/RHS Global growth (%)/RHS 90 8% 6% 70 4% 2% 50 0% -2% 30 -4% Jun-17 Apr-17 Feb-17 Oct-16 Dec-16 Aug-16 Jun-16 Apr-16 Feb-16 Dec-15 Oct-15 Aug-15 Jun-15 Apr-15 Feb-15 Dec-14 Oct-14 Jun-14 Aug-14 Apr-14 Feb-14 Dec-13 Oct-13 Aug-13 Jun-13 Apr-13 Feb-13 Dec-12 Oct-12 Aug-12 -6% Jun-12 10 Source: EIA, SICO Research Exhibit 8: Oil Demand- OECD vs Non- OECD OECD (% global demand) Non-OECD (% global demand) OECD growth(%) Non OECD growth (%) Global growth (%) 100% 10% 8% 80% 6% 4% 60% 2% 40% 0% -2% 20% -4% 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 -6% 2005 0% Source: EIA, SICO Research 4
  5. SICO RESEARCH Oil Markets Update Oil Supply Trends Exhibit 9 : YoY Oil Supply- OPEC: crude and NGLs (mn bpd) OPEC Crude 40 OPEC NGLs OPEC Supply (% global supply)/RHS 41% 35 40% 30 39% 25 38% 20 37% 15 2017 2016 2015 2013 2010 2008 2005 2014 34% 2012 0 2011 35% 2009 5 2007 36% 2006 10 Source: EIA, SICO Research Exhibit 10: MoM Oil Supply- Global Supply vs OPEC Crude (mn bpd) 34 OPEC Crude 100 Global Oil Supply 33 95 32 31 90 30 85 29 Jun-17 Feb-17 Apr-17 Oct-16 Dec-16 Jun-16 Aug-16 Apr-16 Feb-16 Oct-15 Dec-15 Jun-15 Aug-15 Feb-15 Apr-15 Dec-14 Oct-14 Aug-14 Jun-14 Feb-14 Apr-14 Oct-13 Dec-13 Jun-13 Aug-13 Apr-13 Feb-13 Dec-12 Oct-12 Jun-12 Aug-12 Feb-12 80 Apr-12 28 Source: EIA, SICO Research Exhibit 11: YoY Oil Supply- Non OPEC Crude (mn bpd) Non OPEC Crude 65 Non OPEC Supply (% global supply)/RHS 66% 60 64% 55 62% 50 60% 45 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 58% 2005 40 Source: EIA, SICO Research 5
  6. SICO RESEARCH Oil Markets Update OPEC Spare Capacity and OECD Commercial Inventory Exhibit 12 : OECD commercial inventories – demand cover (days) 67 Crude Imventory (Days) 65 2017 63 2 0 16 61 59 5 Year avg. 57 55 53 51 49 47 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: EIA, SICO Research Exhibit 13: Spare Capacity- Long Term Trend (mn bpd) OPEC Spare Capacity 3.8 Spare Capacity (% global demand)/RHS 5% 4.0 4% 3.1 2.1 2.1 1.5 2.2 2.1 2.1 1.5 1.4 1.0 3% 2% 1.2 1% 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 0% 2005 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 Source: EIA, SICO Research 6
  7. SICO RESEARCH Oil Markets Update OPEC Production Exhibit 14 : in Kbpd Cr ude P r oduc t ion J un-1 7 Ma y-1 7 9,930 9,950 2,860 2,900 2,710 2,700 620 615 3,760 3,760 4,450 4,410 1,040 1,040 1,670 1,660 760 550 530 530 1,700 1,600 1,980 1,980 Saudi Arabia UAE Kuwait Qatar Iran Iraq Algeria Angola Libya Ecuador Nigeria Venezuela Total OPEC Crude Total OPEC ex Iraq Oman Bahrain Total GCC Crude Source: Bloomberg, SICO Research Cha nge Spa r e (MoM) Ca pa c it y Ca pa c it y (20) 11,500 1,570 (40) 3,150 290 10 3,000 5 780 160 4,000 240 40 4,700 250 1,150 110 10 1,870 200 210 780 20 555 25 100 2,200 500 2,500 520 32,210 28,880 31,895 28,880 315 - 1,007 180 17,307 1,007 180 17,352 (45) 36,405 32,445 Exhibit 15: OPEC Production 34,000 OPEC Crude Production 33,000 32,000 31,000 30,000 29,000 May-17 Jan-17 Mar-17 Sep-16 Nov-16 Jul-16 May-16 Mar-16 Jan-16 Nov-15 Jul-15 Sep-15 Mar-15 May-15 Jan-15 Nov-14 Sep-14 Jul-14 May-14 Jan-14 Mar-14 Sep-13 Nov-13 Jul-13 Mar-13 May-13 Jan-13 Nov-12 Jul-12 Sep-12 Mar-12 May-12 Jan-12 28,000 Source: Bloomberg, SICO Research 7
  8. Exhibit 18 : UAE (in Kbpd) 850 800 750 700 650 600 Source: : Bloomberg, SICO Research Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Source: : Bloomberg, SICO Research Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Jan-12 31,000 11,000 29,000 10,000 27,000 9,000 25,000 8,000 23,000 7,000 Exhibit 16: OPEC ex Iraq (in Kbpd) Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 May-17 Jan-17 Sep-16 May-16 Jan-16 Sep-15 May-15 Jan-15 Sep-14 May-14 Jan-14 Sep-13 May-13 Jan-13 Sep-12 May-12 SICO RESEARCH Oil Markets Update Country wise Production Trend Exhibit 17: Saudi Arabia (in Kbpd) Source: : Bloomberg, SICO Research Exhibit 19: Kuwait (in Kbpd) 3,200 3,200 3,000 3,000 2,800 2,800 2,600 2,600 2,400 2,400 2,200 2,200 2,000 2,000 Source: : Bloomberg, SICO Research Source: : Bloomberg, SICO Research Exhibit 20: Qatar (in Kbpd) Exhibit 21: Iran (in Kbpd) 4,000 3,500 3,000 2,500 2,000 Source: : Bloomberg, SICO Research 8
  9. Source : : Bloomberg, SICO Research Exhibit 24: Ecuador (in Kbpd) Source: : Bloomberg, SICO Research Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 1,400 1,200 1,000 800 600 400 200 - Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Exhibit 22: Algeria (in Kbpd) 2,500 2,500 2,200 2,300 1,900 2,100 1,600 1,900 1,300 1,700 1,000 1,500 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 SICO RESEARCH Oil Markets Update Exhibit 23: Angola (in Kbpd) 2,000 1,800 1,600 1,400 1,200 Source: : Bloomberg, SICO Research Exhibit 25: Libya (in Kbpd) 600 2,000 560 1,600 520 1,200 480 800 440 400 400 - Source: : Bloomberg, SICO Research Source: : Bloomberg, SICO Research Exhibit 26: Nigeria (in Kbpd) Exhibit 27: Venezuela (in Kbpd) Source: : Bloomberg, SICO Research 9
  10. SICO RESEARCH Oil Markets Update US Product Inventory Exhibit 28 : US Oklahoma crude inventory (‘000 bbls) Exhibit 29: US total crude inventory (‘000 bbls) 570,000 74,000 530,000 2016 2017 2017 2016 64,000 490,000 54,000 450,000 5 Year avg. 410,000 5 Year avg. 44,000 370,000 34,000 330,000 24,000 290,000 14,000 250,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: EIA, SICO Research Source: EIA, SICO Research Exhibit 30: US total gasoline inventory (‘000 bbls) Exhibit 31: US total distillate inventory (‘000 bbls) 275,000 180,000 255,000 2017 2017 2016 160,000 2016 235,000 140,000 215,000 5 Year avg. 195,000 175,000 5 Year avg. 120,000 100,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: EIA, SICO Research Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: EIA, SICO Research Exhibit 32: US refinery utilisation (% 100 95 90 2017 2016 5 Year avg. 85 80 75 70 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: EIA, SICO Research 10
  11. SICO RESEARCH Oil Markets Update NOTES Contact Details BMB Centre , 1 Floor P.O Box 1331, Diplomatic Area Manama Kingdom of Bahrain st Investment Research research@sicobahrain.com     EIA: Energy Information Administration; IEA: International Energy Agency; OPEC: Organisation of the Petroleum Exporting Countries CFTC non-commercial contracts include future positions only. OPEC quota compliance based on Bloomberg estimates; may differ from actual production. Bahrain monthly production figures not available; based on historical production data and SICO estimates. Head of Research Nishit Lakhotia, CFA, CAIA Tel: (Direct) +973 – 17515021 Brokerage Fadhel Makhlooq Tel: (Direct): +973 – 17515202 Visit us at www.sicobahrain.com Securities & Investment Company BSC Disclaimer This report does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or any invitation to offer to buy or subscribe for any securities. The information and opinions contained in this report have been compiled or arrived at from sources believed to be reliable and in good faith, but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness and are subject to change without notice. Investors must make their on investment decisions. Past performance is not necessarily a guide to future performance. Nothing in this report should be construed as investment or financial advice or as an advice to buy or sell the securities of the company referred to in this report. SICO and/or its clients may have positions in or options on the securities mentioned in this report or any related investments, may effect transactions or may buy, sell or offer to buy or sell such securities or any related investments. Additional information on the contents of this report is available on request. Copyright Notice © Securities and Investment Company 2017. This report is being supplied to the recipient for information and not for circulation and may not be reproduced, redistributed or passed on to any other person or published, in whole or in part. Copyright Notice 11 © Securities & Investment Company BSC 2012. This report is being supplied to the recipient for information and not for circulation and may not be reproduced, redistributed or passed on to any other person or published, in whole or in part.