BAKU, Azerbaijan, Sept.28
By Leman Zeynalova – Trend:
Looking into 4Q20, the US JP Morgan Bank still sees global oil consumption recovering another 2.5 mbd—on holiday travel and continued strength from the industrial and petrochemical sectors—to average 94.1 mbd in 4Q20, or about 6.6 mbd lower yoy, Trend reports citing the Bank.
This estimate is still about 2.1 mbd lower, on average, than the latest forecasts from the three main agencies (our estimate is 1.9, 3.4 and 1.0 mbd lower than IEA, EIA and OPEC September forecasts for 4Q20, respectively). Offsetting some of that 2.5 mbd qoq growth in demand is the surprising return of Libyan crude exports and production, with the exports potentially bringing about 12 million barrels to the regional markets over the next few weeks, and production adding another 500-600 kbd by yearend.
“Assuming exports are restored, Libyan volumes are large enough that they will both impact global balances but also accentuate regional imbalances, depending where the exports are directed. Traditionally, about two-thirds of Libya’s exports were absorbed by the currently oversupplied European market, and a quarter of shipments were channeled into Asia. But over the past two years, demand for Libyan crudes has increased gradually among Asian refiners, with renewed interest for sweet crudes from China, Malaysia and Thailand.
"The potential surge in Libyan light, sweet oil could further upend the current state of the oil market and add another layer of volatility to physical differentials, especially in the Mediterranean and Atlantic Basins. Our supply-demand balances point to narrowing deficits (-1.4 mbd crude deficit in 4Q20), leaving limited room for demand slippage and other miscalculations. Adding oil to the market at such a time is not an advisable gambit, in our opinion. We maintain our 4Q20 price forecast of $41/bbl,” said JP Morgan.
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