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Page added on September 12, 2019

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Yergin: Expect Extreme Volatility In Oil Markets

Consumption

Rising pipeline takeaway capacity in the Permian and global oil demand growth at its weakest in a decade are set to lead to more volatility in oil prices in the near term, a prominent energy expert said, joining a growing number of analysts who see prices further depressed by slowing economies and crude demand.

“The pipeline bottlenecks are in the process of being resolved, so a lot more oil is going to come onto the market by the end of the year. We expect the U.S. (crude oil output) to be up to 13 million barrels a day,” IHS Markit’s vice chairman Daniel Yergin told CNBC on Tuesday.

While U.S. production will continue to add more supply in an already oversupplied global market, on the demand side, expectations are getting increasingly pessimistic.

“We’re in one of the weakest periods since 2008 and we think demand growth this year is under a million barrels per day. So you have that factor at the same time as you have more oil coming to the market. So expect some volatility,” Yergin told CNBC in an interview on the sidelines of a conference in Abu Dhabi.

Despite expectations of volatility, IHS Markit’s vice chairman sees Brent Crude prices range-bound in the US$55-65 range.

Yergin is not alone in predicting substantially lower oil demand growth this year than originally anticipated. 

The International Energy Agency (IEA) revised down its demand growth estimates for 2019 in its latest Oil Market Report, by 100,000 bpd to 1.1 million bpd, after seeing that between January and May demand growth was just 520,000 bpd, the lowest increase for the period since 2008.

Several Wall Street investment banks have already warned that the escalating U.S.-China trade war raises the odds of an economic slowdown and subsequent low oil demand growth. Some banks have already cut their oil demand growth estimates for this year, saying that oil demand could grow at its slowest pace in at least half a decade.

In July, Barclays cut its oil price forecasts for the second half of 2019, saying that demand growth would be just over 1 million bpd this year. Barclays revised down its forecasts by US$2 to US$69 per barrel Brent Crude and US$61 per barrel WTI Crude.

In August, Morgan Stanley said that demand growth continues to soften amid slower economic growth and cut its forecasts for Q3 and Q4 2019 for Brent Crude to US$60 from US$65 per barrel, and for WTI Crude to US$55 from US$58 a barrel.

This week, Goldman Sachs revised down its oil demand growth estimate to 1 million bpd, down by 100,000 bpd from the previous outlook.

“Our oil supply-demand outlook for 2020 calls for additional OPEC production cuts to keep inventories near normal,” Goldman’s analysts said in a note, as carried by Reuters.

In its Short-Term Energy Outlook (STEO) published on Tuesday, the EIA also cut its global demand growth estimate for 2019 to 900,000 bpd, down by 100,000 bpd from the August forecast.

“If realized, 2019 would be the first year when demand growth is less than 1.0 million b/d since 2011,” the EIA said, and slashed its Brent Crude forecast by US$2 from the August outlook to US$63. For 2020, EIA expects annual average Brent Crude prices to slightly drop to US$62 a barrel, which would be US$3/b lower than the forecast in August.

It’s not only demand that will weigh on oil prices for the rest of the year—supply out of the U.S. is expected to increase with reduced takeaway constraints from the Permian to the U.S. Gulf Coast. The Cactus II crude oil pipeline added an estimated 670,000 bpd and the EPIC Midstream natural gas liquids pipeline, which was repurposed for crude oil, added another 400,000 bpd capacity, EIA said.

Thanks to Cactus II and EPIC, outbound shipments of crude oil from Corpus Christi surged to a record in the first week of September, RBN Energy said on Monday, noting that the data may be “suggesting that the expected surge in exports of Permian oil is finally occurring.”

Should the “surge in export volumes continue to build in the weeks ahead, the crude-oil export infrastructure at Corpus may finally get the benefit of the doubt,” RBN Energy said.

Yet, a growing group of analysts believe that U.S. shale production growth will considerably slow down for the rest of the year, giving oil bulls hope that the global oversupply concerns could be overblown.

Supply and demand issues and the unpredictable nature of the ongoing U.S.-China trade war are setting oil prices for an extended period of volatility.

OilPrice.com



21 Comments on "Yergin: Expect Extreme Volatility In Oil Markets"

  1. makati1 on Thu, 12th Sep 2019 7:22 pm 

    First, who gives a fuck about oily things? Answer: only those who have investments in a losing business and/or a misguided career in same. The rest of us just ignore the ups and downs and try to stay solvent.

    Second, 99% of what is on the internet is either fluff, propaganda or lies. I have cut my online time drastically and only read those articles I consider important and mostly true, that affect me and mine. I read few here on PO.

    Third, since I cannot influence any of the people who make the big decisions, I am content to watch events unfold and try to determine what I should do to protect myself and my family/friends from the worst consequences. Again, I have little control over even those so I only advise, not force.

    We are beginning a very difficult time. The end of an energy fueled time of wealth and waste in the West and a time of growth and change for the better in the East. Buckle up and pass the popcorn.

  2. Davy on Thu, 12th Sep 2019 9:07 pm 

    So true makato.

    Saved to my notes to copy and paste on my own blog, seeing as I am spending so much less time on this lame unmoderated forum nowadays.

  3. Dredd on Fri, 13th Sep 2019 5:29 am 

    “Expect Extreme Volatility In Oil Markets”

    As we were warned “Expect Extreme Volatility In Climate Change” (The TIME Has Come Today).

  4. ANAL REAPER on Fri, 13th Sep 2019 6:20 am 

    Ya know.

    Only faggots and chinks believe this shit.

    PEAK OIL/TRUMP 2020!

    MAGA Niggas!

  5. Robert Inget on Fri, 13th Sep 2019 9:27 am 

    US onshore decline rate reaches 35% or 3.5M barrels per year (IHS)
    The results are telling—North American onshore base oil-production decline rates are extremely rapid—existing onshore producing wells will decline by 35 percent during the next 12 months. This compares with base decline rates of 5 percent to 14 percent for most petroleum systems globally during the same period, and a base decline rate of less than 15 percent a decade ago in the U.S.

    The North American onshore base production-decline rates are accelerating in both absolute and percentage terms. Comparing 2017 to 2019, IHS Markit calculates that the onshore oil base decline nearly doubled (measured by the production drop from January through December of a given year, without accounting for wells added by new capital). Base production declined by 1.8 million barrels of oil per day or 28 percent in 2017, but will fall by 3.5 million barrels of oil per day or 35 percent in 2019.

    “The treadmill that producers are fighting is moving very fast,” said Raoul LeBlanc, vice president of North American Unconventional Oil and Gas at IHS Markit. “As producers come under pressure to restrain investment, this decline rate is becoming the main factor that promises to slow the explosive U.S. production growth we’ve witnessed the past few years.”

    http://northamericanshalemagazine.com/articles/2792/ihs-releases-shale-production-data-decline-rates-for-us-wells

    I don’t know if those bullish on shale growth understand what it means for the industry baseline decline rate to increase from 1.8M to 3.5M in two years. No matter how much one believes in productivity growth, an aggregate decline rate of that magnitude can’t be countered with a declining rig count.

  6. MODS supremacist muzzie jerk on Fri, 13th Sep 2019 11:42 am 

    supertard fitzgerald now reporting muzzie prepping young muzzies who go to college how to handle the media
    what group of youngers have this sophisticate training? few if none

    the love for muzzie is one-way in addition to supertards love for muzzies

    ‘lo you’re the best of humanity’

    that’s why i “reverted” to a muzzie jerk

  7. MODS supremacist muzzie on Fri, 13th Sep 2019 11:45 am 

    i “reverted” to a supreamcist muzzie jerk because i like power.
    after hudred of years informing readsers of muzzie love, super goat would just ignore me.
    but now I’m a “revert” …super goat is feeling intense heat, he instructed supertard big muzzie beard to ban me from jihadwatch. then the other shoe falls and told supertard sis pbuh to ban me off this site.

    Maximum power principle howard t odum
    muzzie is maxium, god is not great, “god” is greatest/greater
    “god is not great, that’s due to muzzie love”

  8. Sissyfuss on Fri, 13th Sep 2019 2:00 pm 

    Anal Bleeder, the shock value is long gone so what else ya got? How bout some cognitive ability that isn’t soaked in wine.

  9. Duncan Idaho on Fri, 13th Sep 2019 6:41 pm 

    1996 — US: 6,000 rally & 1,033 are arrested near the Headwaters Grove in rural Carlotta, California, in a protest against the logging of one of the last large unlogged redwood stands in the world.

    (I was there, but not arrested)

  10. DerHundistLos on Sat, 14th Sep 2019 2:43 am 

    Duncan Idaho:

    Good man. We need more people like yourself x 1.000.

  11. Cloggie on Sat, 14th Sep 2019 7:03 am 

    Thousands protest against the IAA (Internationale Automobil Ausstellung) in Frankfurt, demand climate neutral traffic by 2035, outlawing SUVs:

    https://www.spiegel.de/wirtschaft/iaa-in-frankfurt-am-main-autogegner-fordern-klimaneutralen-verkehr-bis-2035-a-1286834.html

  12. Cloggie on Sat, 14th Sep 2019 7:12 am 

    2020-Dems: probably either Biden or Warren:

    https://www.spiegel.de/politik/ausland/debatte-der-demokraten-joe-biden-top-bernie-sanders-flop-a-1286563.html

    …resulting in a win for Trump.

  13. Davy on Sat, 14th Sep 2019 7:21 am 

    “Saudi Arabia oil facilities ablaze after drone strikes”
    https://tinyurl.com/y53cf7p2 bbc

    “Drone attacks have set alight two major oil facilities run by the state-owned company Aramco in Saudi Arabia, state media say. Footage showed a huge blaze at Abqaiq, site of Aramco’s largest oil processing plant, while a second drone attack started fires in the Khurais oilfield. The fires are now under control at both facilities, state media said. A spokesman for the Iran-aligned Houthi group in Yemen said it had deployed 10 drones in the attacks. The military spokesman, Yahya Sarea, told al-Masirah TV, which is owned by the Houthi movement and is based in Beirut, that further attacks could be expected in the future. He said Saturday’s attack was one of the biggest operations the Houthi forces had undertaken inside Saudi Arabia and was carried out in “co-operation with the honourable people inside the kingdom”. Saudi officials have not yet commented on who they think is behind the attacks. “At 04:00 (01:00 GMT), the industrial security teams of Aramco started dealing with fires at two of its facilities in Abqaiq and Khurais as a result of… drones,” the official Saudi Press Agency reported. “The two fires have been controlled.”

  14. I AM THE MOB on Sat, 14th Sep 2019 7:40 am 

    Germany prepared to take in migrants who arrive in Italy by sea

    https://www.dw.com/en/germany-prepared-to-take-in-25-of-migrants-who-arrive-in-italy-by-sea/a-50427181

    We came we saw, he died!

  15. I AM THE MOB on Sat, 14th Sep 2019 7:48 am 

    Yergin looks a ghoul! Just like Lynch!

    Peak oil deniers are so fugly

    I bet Clogg is 400 lbs. All he does is sit at a computer all day. he doesn’t work and has no family or life. Just spewing hate and lies from laughable sources. he is the kind of hate that only emerges from crushed dreams.

  16. Cloggie on Sat, 14th Sep 2019 8:19 am 

    Order your turnkey offshore windfarm in Europe now and avoid the rush!

    https://www.dailymail.co.uk/news/article-7463189/Drone-attacks-spark-huge-fires-two-Saudi-oil-refineries.html

    “Iran-backed militants admit drone swarm strike on world’s largest oil processing plant in Saudi and at second nearby facility sparking huge fires as tensions reach boiling point following tanker attacks”

  17. Cloggie on Sat, 14th Sep 2019 8:31 am 

    “I bet Clogg is 400 lbs.“

    Actually 190 cm, 85 kg. Did a Coopertest last year of 3000m.

    https://en.wikipedia.org/wiki/Cooper_test

    Dutch pop icon Angela Groothuizen:

    “Links zijn is eenzaam: in de televisiewereld lijkt iedereen nu rechts”

    “Being a leftist is lonely. In the television world everybody seems to have become a rightwinger”

    https://www.volkskrant.nl/

    LOL Europe is shifting to the right! We are NOT going to piss our civilization away to muslims or negros, like spineless Anglos have done, hypnotized as they are by the kosher media-promoted smearword “racism”.

    And since we have Russia and China on our side, we have already won.

    No worries white Americans, your older brothers from Europe are standing by to rake you…. errr… liberate you from uncle Soros and his Open Society gang. Not that you deserve it.

    https://youtu.be/RLTvGMsEBoo

    “Yes, civil war is coming”

  18. Cloggie on Sat, 14th Sep 2019 8:38 am 

    Poor leftist Angela Groothuizen:

    https://youtu.be/6XpEW6aYPZc

    From her “Dolly Dots” days in the seventies:

    https://youtu.be/F49S7gDuzVU

  19. Cloggie on Sat, 14th Sep 2019 8:43 am 

    German media are afraid of Dutch Nazi Design exhibition in Den Bosch:

    https://www.volkskrant.nl/cultuur-media/huiver-en-afkeer-in-duitse-media-rond-expo-met-hakenkruizen-als-designobjecten-in-den-bosch~b04a0fc9/

    The exhibition is shown without the usual moralizing, but “as is”. I will visit this exhibition soon myself, after all, Nazis are sexy. Makes you feel a little “bad ass”.

  20. I AM THE MOB on Sat, 14th Sep 2019 9:51 am 

    Italy’s new government says migrants can disembark from rescue boat

    https://www.theguardian.com/world/2019/sep/14/italys-new-government-says-migrants-can-disembark-from-rescue-boat

  21. I AM THE MOB on Sat, 14th Sep 2019 9:57 am 

    Clogg

    You spend all day on the internet spewing nonstop bigotry and hate. Everyone knows you are the biggest loser here. That is why you had to join a Nazi cult. Because the rest of the society doesn’t like you. Anyone who is white can join the alt right. As long as you follow orders. And boot licking is your expertise.

    When Lenin coined the phrase “useful idiot”. I think he was thinking of you.

    LOL

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