Dubai PR Network, Online Press Release from Dubai and Middle East
 
Business, Banking and Investments(Banking & Investments)
Filter PR by
  
Global Energy Weekly: Oil differentials go into hibernation
 
15 September 2020
 
 
Key takeaways
 
•         The collapse in North American oil supply tightened differentials and WTI-Brent, and supply is unlikely to recover quickly
•         As demand normalizes, WTI-Brent, inland-coastal, & Mid-Cush spreads should stay tight, but WCS-WTI and Bakken-WTI face risks
•         Stalled or regressing demand, weak OPEC+ compliance, US elections, and the ongoing hurricane season present risk to our views
 
________________________________________
 
 
The recent oil selloff puts North American supply at risk…
The oil price collapse in March and April has completely altered the outlook for North American supply (see Pressing reset on medium term oil supply). US crude oil output fell 2.7mn b/d or 21% from March to May as E&Ps shut-in wells and ceased completion activity (see Doing the oil market's dirty work). Production has since partially recovered on restarted wells, but we expect it will decline into year-end and remain subdued in 2021. In Canada, shut-ins and accelerated oil sands maintenance cut output by roughly 900k b/d over the same period, but oil sands restarts are still underway and should lift output into year-end. After a period of stability, WTI dipped to $37/bbl this week, likely making E&Ps reluctant to boost activity and presenting downside risks to US output.
…further supporting our view for tight basis differentials
 
From light to heavy, sweet to sour, or north to south, excess pipe and refining capacity has led to tighter differentials across North America (see When the fracking stops). Now we see modest downside risk to WCS and Bakken diffs on Canadian output restarts and DAPL uncertainty. Lower light crude supply north of Cushing should keep WTI relatively firm, perpetuating the roll-down in Midland-Cushing spreads, especially as PADD 2 runs normalize. Inland-coastal spreads like WTI-MEH and Midland-MEH should remain tight on ample pipe, sluggish supply, and rebounding refinery demand. Recently, the WTI 1-6 spread has reflected concern over oil balances and potential run cuts, but we are optimistic about the demand recovery and expect runs to continue to improve. Lower oil output and higher runs should strengthen WTI timespreads and support WTI-Brent. 
 
Several risks could wake differentials up from hibernation
 
Refining margins should remain weak for some time as refiners test the markets ability to absorb additional fuel. This could lead to run cuts, especially if the demand recovery stops or regresses due to a 2nd wave or an economic downturn. OPEC+ compliance plays a huge role in the rebalancing process and decisions to overproduce could lead to weaker timespreads and WTI-Brent. Depending on who is under-complying, this could also positively impact light-heavy and sweet-sour spreads like LLS-Mars and Brent-Dubai. The US elections also present downside risk to US supply, which could lead to even tighter US differentials. Last, hurricane season is still underway and presents numerous risks to production, exports, and refinery operations, which could create risks to differentials and timespreads in both directions.
 
 
 


Posted by : Dubai PR Network Editorial Team
Viewed 2751 times
PR Category : Banking & Investments
Posted on : Tuesday, September 15, 2020  4:33:00 PM UAE local time (GMT+4)
Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of DubaiPRNetwork.com.
Previous Story : Unlocking the Potential of eSIM for Consumers
Next Story : Leaders Sign Unique Roadmap for Stakeholder Capitalism in th...
Email this article Print this article

Share this article with your friends and followers
NewsVine
Back to Section Home

Related Stories



 
 
Most Viewed Press Release posted in the last 7 days
My Review Of Laser Treatment And Spider Veins [6220-Views]
Global Private Wealth Holders Set to Almost Double Impact Investing Allocation Over Next ... [5498-Views]
Stunning Depth Haute Joaillerie Collection 2020 [5469-Views]
Vatika Launches Awareness Campaign to Address Hair Fall Through a 3 Step Haircare Regimen ... [4522-Views]
La Panthre Perfume [3874-Views]
Consumers Expect All Brands to Provide Wellness Offerings, New Ogilvy Study Finds [3698-Views]
Code 11.59 by Audemars Piguet Grande Sonnerie Carillon Supersonnerie [3669-Views]
Hublot Celebrates Oman's Jubilee [3268-Views]
Marina Rinaldi Pre-Fall 2020 Call Me [3050-Views]
du Announces Pre-Orders for iPhone 12 Pro and iPhone 12 Pro with 5G [3013-Views]
Samsung Announces Availability of the Galaxy S20 FE Across the UAE [2919-Views]
Younger Saudi Healthcare Professionals Are Enthusiastic Adopters of New Technology, Accord... [2903-Views]
Dubai Diabetes Centre Explores Telemonitoring for Diabetics [2899-Views]
Enhance your Mood with Rasasi Perfumes [2772-Views]
Good News for Al Quoz Residents Union Coop's Coop' Concept is Opening Soon [2722-Views]
Danube Home Launches Its Bigger and Better Online Shopping Platform! [2722-Views]
SunKiss Ups the Skin Protection Game with Launch of Sustainable, Luxurious Suncare Proudly... [2698-Views]
Euisun Chung Inaugurated as Chairman of Hyundai Motor Group, Opening a New Chapter in Hist... [2665-Views]
Dubai International Financial Centre Grand Mosque Welcomes Worshippers [2620-Views]
Balqees Fathi Launches BEX Beauty [2501-Views]
Stress-Free Tresses While on Holiday with HASK's New Travel-Size Products [2497-Views]
Dubai Sports Council Invites Registered Participants for Al Marmoom Dune Run build-up' Ru... [2476-Views]
Saudi's International Medical Center Wins the International CHIME 2020 Digital Health Most... [2468-Views]
Buyers Can Seal Deals with Contacts Around the World at WTM Virtual [2444-Views]
Synthetic ETFs Delivered Strong Outperformance Versus Physical ETFs During COVID-19 Volati... [2366-Views]
 
RSS Facebook Twitter LinkedDin
 
Top Sections
 
Top Stories