Oil market

In-depth reports on key Oil market.

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    Tue, 18 April 2017

    Quarterly Oil Market Update: (Volatility Returns to Oil Markets)

    Oil prices rose 10 percent quarter-on-quarter in Q1 2017, but volatility levels were up too, especially towards the end of the quarter.  Although both OPEC and non-OPEC cuts are contributing to a reduction in global oil balances, global commercial oil inventories nevertheless remain high. Demand is expected to pick up in H2 2017.

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    Tue, 21 February 2017

    Petrochemicals and the Vision 2030

    The Saudi petrochemical industry is vital to the Kingdom’s non-oil economy with chemical and plastic exports comprising a substantial 60 percent share of total non-oil exports. As a result, the sector has been identified by both the National Transformation Program (NTP) 2020 and Vision 2030 to help lead the push away from fossil fuel reliance. But this restructuring of the sector comes at a time when it is already facing up to a number of challenges, both at home and abroad. Besides seeing a drop in global chemical prices in the last two years, the sector has also seen domestic feedstock prices being raised in 2016, with further rises expected in 2020. In addition, global competition is set to intensify, especially from the US and China, where significant rises in petrochemical capacity are expected in the next few years.

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    Thu, 16 February 2017

    Quarterly Oil Market Update: All eyes on OPEC and the US

    Currently, Brent oil is trading at around $55 per barrel, with little deviation from this level in the last two months. This stability in prices is mainly due to coordinated action by OPEC and some non-OPEC members, with January crude oil production data showing OPEC’s oil output was down, month-on-month, by 900 thousand barrels per day. Despite the relatively stable start to the year, oil price volatility is likely to re-emerge during 2017 as global oil markets face up to a rising risk of OPEC noncompliance to production cuts, upward revisions in US oil production, and policy initiatives from the new US administration.

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    Sun, 04 December 2016

    Oil Note: OPEC Announces Production Cuts

    OPEC agreed to cut its own production by 1.2 million barrels per day (mbpd), to 32.5 mbpd, on 30th of November. Oil prices immediately rose by 8 percent following the announcement and could rise even further in the short term. Whether prices remain elevated will depend on OPEC implementing its agreement with discipline as well as no major rises in US shale oil supply. Overall, whilst the OPEC cuts represent an up-side risk to oil prices, due to the hurdles mentioned above, we are not revising our current forecasts just yet, but will be monitoring developments closely.

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    Sun, 16 October 2016

    Quarterly oil Market Update (Q3 2016): Are Oil Markets better off with OPEC cuts?

    OPEC’s decision to announce, but not to implement, a cut in production immediately sent Brent oil prices up 6 percent at the end of September. Prices were further supported by statements from Russia expressing its readiness to cooperate in order to limit oil output. OPEC plans on meeting in November, when the extent of OPEC cuts and individual country quotas are to be decided. Whilst the deal to cut remains fragile and fraught with numerous obstacles, as a result of the financial difficulty faced by a number of OPEC member economies, most notably Venezuela, Nigeria and Libya, there will be immense pressure to ensure some sort of deal is reached in November. In this context, we see the most likely outcome being an agreement to cut production, but only by a small amount, more akin to a production ’freeze’ rather than an outright cut. Such an agreement would underline OPEC’s intention to limit further rises in production and help stabilize oil prices at current levels (around $50 per barrel).

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    Wed, 29 June 2016

    Temporary Outages Helping Balance Oil Markets

    Brent oil prices surged to an average of $45 per barrel (pb) in Q2 2016, up 35 percent quarter-on-quarter, due to a combination of developments. Firstly, oil outages from Canada and Nigeria resulted in at least 1.5 mbpd being temporarily unavailable to global oil markets. Secondly, slowing US shale oil output resulted in year-on-year growth in US crude oil imports being consistently positive for the first time in six years. ‘Brexit’ had a relatively modest impact on oil markets, with Brent slipping back slightly below $50pb immediately following the UK’s decision to leave the European Union. The effects over the longer term are less clear, with a worse-case scenario being a global contagion effect resulting in increased volatility in global oil and financial markets. 

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    Tue, 21 June 2016

    Recovery in Oil Prices: Rebound in US Shale Oil?

    During Q1 2016, US oil production saw its first year-on-year decline in eight years and this decline is expected to continue throughout the remainder of 2016. Despite this, the recently observed uptick in oil prices presents shale oil companies with a potential life-line. Not only does it raise the possibility of hedges being taken out again, an increasing number of shale oil companies are restructuring under chapter 11 bankruptcies, thereby prolonging oil production. Concurrently, the number of drilled uncompleted wells (DUCs), all of which can be brought on-line relatively quickly, have risen in recent months. All of these developments mean that even as current oil and financial indicators point to declining production in the next two years, production could turn out to be better than expected.

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    Wed, 13 April 2016

    Quarterly Oil Market Update (Q1-2016): Production "freezes" not a big deal

     Lower yearly oil prices are taking their toll on shale oil producers, with Q1 2016 seeing the first year-on-year fall in US production in eight years, but record rises in OPEC and Russian crude production have more than compensated for this drop.  Oil prices have shown some firmness in the run-up to the production ‘freeze’ meeting between a number of oil producing countries next week. In our view, there are significant risks to either an agreement being reached or a lack of implementation even if there is an agreement. In both instances we would expect the gains of the previous month or so to be lost. As such we maintain our full year 2016 Brent forecast at $33 pb with prices increasing to $44 pb in 2017. 

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    Tue, 26 January 2016

    Quarterly Oil Market Update (Q4-2015):Oil prices are going to be lower for longer

    The current period of low prices is set to remain throughout 2016, pulled down primarily as a result of persistently high oil supply. All-out competition between members of OPEC will be the main reason for continued oversupplied markets. We expect to see OPEC production rising by a further 500 thousand barrels per day (tbpd) by Q4 2016 year-on-year with most of the rises coming from increased Iranian supply. Meanwhile, recently downward revised global economic growth forecasts by the IMF point to moderate yearly growth in oil demand. All of these factors have led us to cut our full year 2016 Brent forecast to $33 per barrel (pb), from $47 pb previously, and 2017 forecast to $44 pb from 58 pb previously.

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    Wed, 21 October 2015

    Quarterly Oil Market Update- Attention shifting from supply to demand.

    Brent Oil prices dropped by 18 percent quarter-on-quarter in Q3 2015 and averaged $50 per barrel. The market continues to witness a shift from supply to demand and no appreciable upside on oil prices is envisaged by this trend. The continued moderate pace of global economic growth will result in a 1.4 percent year-on-year global oil demand uplift with similar growth rates envisaged for 2016. 

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