BAKU, Azerbaijan, June 1
By Leman Zeynalova – Trend:
Minimal oil production shut-ins are expected to remain in place through September, the US JP Morgan Bank said in its Global Commodities Release, Trend reports.
The bank has significantly shifted its view regarding production shut-ins for the month of June.
“While originally we anticipated further growth in production shut-ins by 200 kbd, we now expect production shut-ins to decline to 800 kbd, a 500 kbd reduction from that observed in May. Moreover, operators can bring back most curtailed volumes within weeks,” said the bank.
JP Morgan now expects for a minimal amount of production shut-ins to remain in place through September, given that even amid a price at $30/bbl, some producers were forced to shut-in in March.
“We estimate that price-related production curtailments account for about 85 percent of the production decline in 2Q20,” reads the report.
Meanwhile, natural production declines due to the collapse in frac activity exhibit a significant lag relative to the number of started frac operations (which started declining already in March 2020) and will manifest themselves only in 2H20, according to the bank.
“Given our price forecast, we expect the reactivation of 40 percent of shut-ins by June and over 80 percent by August, which should help offset a large portion of the natural production decline. Accordingly, we expect US crude oil and condensate production to bottom out in June at 11.4 mbd and recover towards 11.6 mbd by August, before declining again towards 11.2 mbd by year-end,” reads the report.
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