BAKU, Azerbaijan, Aug.10
By Leman Zeynalova – Trend:
The pause in demand is taking place at a time when more supply is creeping back to the market and global refineries are showing signs of limiting throughput to work down product stocks, Trend reports citing the US JP Morgan Bank.
Starting from August 1, OPEC+ is set to taper from the 9.6 mbd cut to a 7.7 mbd reduction.
“The additional 1.2 mbd of ‘voluntary’ bonus cuts implemented by Saudi Arabia, Kuwait and UAE will also cease this month. The group is envisioning that the 3.1 mbd of tapering will be partially offset by 0.842 mbd of production cuts in August and September from countries making up for prior under-compliance. A pushback of Libyan production clearly provides some breathing room as does promise by Russia and Saudi Arabia not to export extra production but rather consume it domestically,” JP Morgan said in its report.
The Bank expects OPEC+ production to increase by 4.3 mbd from its bottom in April through December, and 3.4 mbd from July through December. “In North America, 300 kbd of Canadian production has returned through July with 300 kbd more expected in August. In the US, production started to return in late June but EIA reported that US oil production averaged 10 mbd for the month of May. This is about 400 kbd lower than our forecast, suggesting US liquids have a deeper hole to dig out from. Rigs have bottomed, frac crew recovery continues and capex reductions have stopped, but natural declines will weigh heavily on production. “
“We now estimate US crude and condensate supply will decrease 300 kbd through December from our expectations of current production of 11.2 mbd, in part because of the uncertainty around the Dakota Access Pipeline and associated Bakken production. Overall, global crude oil supply is set to rise 4.3 mbd between July and December and 6.2 mbd from June lows.”
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