巴黎银行-全球-石油与天然气行业-供应管理之下的石油-20190429-9页_1mb

FOCUS Oil Summary

Core Content

This report from BNP Paribas provides an analysis of the global oil market dynamics, focusing on oil price trends, supply management strategies by OPEC+, and the impact of US oil production and exports on global benchmarks such as Brent and WTI. It also highlights the role of geopolitical factors, including US sanctions on Iran and Venezuela, in affecting oil supply and market stability.

Key Messages

• Oil prices have rebounded strongly in 2019, with front-month ICE Brent futures up over 30% year-to-date.
• The report maintains a bullish outlook for oil prices until Q3 2019, after which US light crude exports may begin to exert downward pressure on Brent prices.
• OPEC+ is expected to continue supply management in H2 2019 and into 2020, but its effectiveness may decline due to growing US light oil production and exports.
• OPEC+ compliance with supply cuts has improved, particularly from Saudi Arabia, UAE, and Kuwait, while Russia's compliance remains below target.
• Iran and Venezuela are experiencing involuntary supply reductions due to US sanctions, which could create further market imbalances if not offset.
• US oil exports are expected to rise significantly by Q3 2019, which could reduce the pricing power of OPEC+ and lead to convergence of WTI and Brent prices.
• US shale production is price-sensitive, with breakeven prices ranging from USD40 to USD50/bbl, depending on the basin.

Main Views

1. Oil Price Outlook

• 2019: WTI is expected to average USD63/bbl, Brent USD71/bbl.
• 2020: WTI is forecasted to average USD64/bbl, Brent USD68/bbl.
• Prices are expected to rise in Q1-Q3 2019, but may retreat in Q4 as US exports increase and OPEC+ supply policy becomes less effective.
• 2020 is projected to be a range-bound market, with limited price volatility but notable quarterly fluctuations due to delayed data and policy adjustments.

2. OPEC+ Supply Management

• OPEC+ extended supply cuts by 1.2 mb/d in a second round, effective January 2019.
• Compliance has improved, especially from Persian Gulf OPEC members.
• Saudi Arabia has over-delivered its supply cuts, with compliance reaching 252% in March.
• Russia is expected to fully comply by the end of April, but its cooperation is less enthusiastic compared to OPEC members.
• OPEC+ may extend the supply cuts past June 2019, but adjustments may occur based on market data.

3. Impact of US Sanctions

• Iran and Venezuela are experiencing involuntary supply reductions due to US sanctions.
• Iran's production fell from 3.3 mb/d in October 2018 to 2.7 mb/d in March 2019.
• Venezuela's supply is at risk due to diluent shortages and operational disruptions.
• OPEC+ may offset some of the losses from Iran and Venezuela, but not all, leading to market tightness.

4. US Oil Production and Exports

• US oil production is expected to grow to 12.4 mb/d in 2019 and 13.1 mb/d in 2020.
• US exports are set to increase, especially light crude from the Permian basin, which could challenge Brent prices.
• US oil supply growth is driven by technological advances, drilling practices, and existing inventory of drilled but uncompleted wells.
• US light crude is less compatible with OPEC+ supply cuts, which are mainly heavier barrels.

5. Market Outlook

• The oil market is currently supply-driven, rather than influenced by macroeconomic factors.
• Inventory levels are a key determinant of OPEC+ supply policy.
• Market volatility is expected in 2020 due to uncertainty in supply policy and potential unplanned outages.

Key Information

• OPEC+ compliance with supply cuts:
  • OPEC compliance: 153% in March 2019.
  • Non-OPEC compliance: 64% in March 2019.
• US crude exports:
  • Reached over 3 mb/d in 2019.
  • Expected to increase significantly by Q3 2019.
• Breakeven prices for US shale:
  • Best shales: below USD40/bbl.
  • Permian: USD45-50/bbl.
• Iranian oil exports:
  • Average 1.2 mb/d since the beginning of 2019.
  • US sanctions may lead to a non-negligible supply loss.
• Venezuela's oil exports:
  • Subject to US sanctions and operational challenges.
  • Downside risk to production is significant due to power outages and diluent shortages.

Conclusion

The report concludes that while OPEC+ will continue to manage supply in 2019 and 2020, the increasing US light oil exports and shale production growth will challenge its effectiveness. Oil prices are expected to rise through Q3 2019 but may face pressure in Q4. 2020 is likely to be a range-bound year, with notable quarterly fluctuations due to delayed data and policy adjustments. Geopolitical risks, particularly from US sanctions, will continue to influence supply dynamics, but OPEC+ may not act preemptively to offset these losses.