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.pdf

|FOCUS 1 Fig.1:Latest BNP Paribas oil price forecasts Fig.2:Benchmark crude oil prices Sources:Bloomberg,BNP Paribas (1)relative to 05 February 2019 Sources:Bloomberg,BNP Paribas (daily to 26/04/19)COMMODITIES FOCUS|Oil 29 April 2019 KEY MESSAGES Oil prices have recovered strongly year-to-date,with front month ICE Brent futures up by over 30%,and we expect them to continue to rise in the near term.In our view oil producers,bound by the Declaration of Cooperation,run the risk of over-tightening the market in the face of unplanned supply outages and resilient oil demand.We therefore maintain our directional view of an increase in the average price of Brent and WTI until Q3 2019,when these benchmarks are likely to start to become vulnerable to a sharp rise in US exports of light crude thanks to pipeline and terminal capacity expansion.We still expect the OPEC+group to retain supply management in H2 2019 and extend cooperation in 2020.However,with continued growth in US light oil production from shale basins and exports,the efficacy of OPEC+supply policy in 2020 on the price of WTI and Brent,through variations in the output of a mainly heavier barrel,is likely to fall,in our view.We expect continued management to help keep the market in a range,but there is a risk of substantial fluctuations as supply policy adjustments can lag market conditions due to untimely fundamental data.In 2019(Figure 1),we see WTI averaging USD63/bbl(USD+2/bbl)and Brent USD71/bbl(USD+3/bbl).In 2020,we see WTI averaging USD64/bbl and Brent USD68/bbl.Economic concerns that triggered a wave of de-risking and a sharp correction in oil prices last December(Figure 2)have abated.US-China trade talks are in progress,with hopes running high that an accord will be achieved,which in turn is likely to improve pessimistic economic growth outcomes for this year.Central banks have switched to accommodative policy in 2019,notably the Federal Reserve which has signalled rates will stay on hold this year.US dollar strength still presents a headwind for oil and other commodity prices,but the BNP Paribas FX team expects the greenback to depreciate over 2019 and into 2020.The oil market is at present firmly focused on its supply fundamentals,which are supportive for prices,rather than macroeconomic risk.In the face of resilient oil demand,the market has tightened with voluntary and involuntary production declines.OPEC producers,such as Saudi Arabia,the UAE and Kuwait,have over-delivered on pledged supply cuts agreed last December.Russia has,as promised,phased-in its cuts.At the same time,US sanctions have led to Iran and Venezuela,both OPEC countries,experiencing an involuntary fall in output.Finally,chronic and endemic instability in such countries as Libya presents further risk of unplanned outages.In our opinion,OPEC+will extend its cooperation and supply management for the remainder of 2019 and in 2020.This implies that oil supply restraint(or increases)will continue to be coordinated,mainly in line with developments in oil inventory data that we view as the main metric that guides the producer groups supply policy.Please refer to important information and MAR disclosures at the end of this report Harry Tchilinguirian,Economist Commodities|BNP Paribas London Branch Oil under supply management 29/04/2019|FOCUS 2 Russia is aiming to achieve full compliance by the end of April,a timeline similar to the one it adhered to when the first round of coordinated supply cuts was implemented in 2017.Oil under supply management:Looking ahead,OPEC+will have to decide when it meets again on 25 June whether it rolls-over existing supply cuts.If so,then for how long and in what amount.Given the focus,notably by Saudi Arabia,on the level of oil inventories in OECD countries against their recent five-year average as a reflection of the oil markets state of balance,there is a possibility Saudi Arabia will encourage its cohorts to extend cuts.Russias position on the matter is less forthcoming,with some of its private oil companies voicing their desire to raise output.But comments from Russian officials suggest that longer-term cooperation,in the form of cutting or increasing output according to market conditions,is something to which Russia could agree.As such,we make the assumption that producer cooperation will extend past June but may change from the existing arrangements.In addition,we assume that coordinated supply management will remain an ongoing feature of the oil market into 2020.In our opinion,OPEC+is likely to reluctantly cede some market share to achieve an objective of a balanced market in view of US crude oil supply and export growth this year and next.OPEC+reconvenes in June to assess the markets fundamentals,but oil inventory data for the OECD will only go as far as April.We see a good chance that producers will extend the current accords with interim market assessments until mid-year data becomes available.The producer group then runs the risk of over tightening the market,considering supply outages in countries like Iran and Venezuela are likely to grow in our view.US sanctions and oil supply.The impact of voluntary OPEC+supply restraints on the oil markets balance has been reinforced by involuntary losses in Iran and Venezuela,both OPEC countries and both under US sanctions.Irans oil sector was targeted last November,but US sanctions were then accompanied by temporary waivers to a group of eight countries for six months.On 22 April,the US announced that these waivers would effectively expire on 2 May,in line with a policy designed to reduce Irans oil exports to zero.According to the International Energy Agency,Iranian crude production averaged 3.3 mb/d in October 2018 and had fallen to 2.7 mb/d in March.Iranian crude oil exports(Figure 4)have averaged 1.2 mb/d since the beginning of the year.If the termination of waivers even partially achieves the USs zero export goal,assuming some non-compliance,then a non-negligible increment of oil supply will be lost to the market,for which consumers will need to find a replacement.Venezuelas oil sector came under stronger US sanctions when state-oil company PDVSA was categorised as a Specially Designated National in late January.Along with sanctions on Venezuelas central bank,US policy aimed to curb revenues of the incumbent regime of president Nicolas Maduro,while politically backing the self-declared interim president and challenger Juan Guido.The US also banned the exports of its heavy naphtha,used as a diluent for the heavy oil extracted in Venezuelas Orinoco basins.Without diluent,oil wont flow through the pipelines to the oil terminals for export.We expect US sanctions to remain in place as long as the Maduro regime remains in place.Finally,given recurrent power outages affecting operations at oil upgraders,blending activity and loading terminals,there is significant downside risk to the countrys supply,with the possibility of sharp falls in production.Oil supply losses tighten the market.The decision by OPEC+last December to reduce output by 1.2 mb/d for six months in a second round of coordinated producer cuts came into effect in January.OPEC agreed to deliver an 800 kb/d cut,while a 400 kb/d curtailment is to come from non-OPEC countries,mainly Russia.Aggregate compliance with these pledged cuts got off to a slow start,but rapidly improved by the end of Q1,notably as production reductions in Persian Gulf OPEC countries accelerated,going beyond the targets agreed in December.By the end of March,aggregate OPEC compliance with pledged cuts came to 153%,according to the International Energy Agency(IEA)Saudi Arabia was at the forefront of OPECs supply reduction efforts.In mid-February,in a interview with the Financial Times,Energy minister Khalid Al-Falih indicated the kingdom would reduce its crude production to 9.8 mb/d and exports would eventually fall below 7 mb/d(Figure 3).Saudi Arabia made good on these promises,with its crude oil output estimated at 9.8 mb/d in March according to the IEA.Exports averaged about 6.8 mb/d in the first three weeks of April,according to Petro-logistics SA.Saudi Arabia delivered an incremental 500 kb/d cut relative to its pledge of a 322 kb/d reduction of its supply,putting its compliance at 252%in March.It was not alone in going the extra mile however,with the UAE and Kuwait over-achieving with compliance levels of 123%and 128%respectively.On the non-OPEC side,the implementation of supply cuts has been slower,with Russia about 52%compliant in March.Output changes in other non-OPEC countries were generally small,leaving non-OPEC compliance overall at 64%.Oil under supply management COMMODITIES Fig.4:Iranian crude oil exports Fig.3:Saudi Arabian crude oil exports Sources:Petro-logistics SA,BNP Paribas(monthly to April 2019)Shaded area subject to revision.Sources:Petro-logistics SA,BNP Paribas(monthly to April 2019)Shaded area subject to revision.29/04/2019|FOCUS 3 Supply could rise towards the original targets levels of output agreed last December,but this scenario does not necessarily imply that a barrel-for-barrel offset of incremental supply losses from Iran and/or Venezuela will be implemented.US supply to change market dynamics:The consensus expects US oil supply growth to be strong in 2019 and 2020,driven mainly by the Permian shale basin.And as in 2018,the US will lead supply growth within non-OPEC countries,supplemented by contributions mainly from Brazil and Canada.While estimates vary on the strength of this growth,the US Energy Information Administrations April edition of the Short Term Energy Outlook puts average US crude production in 2019 at 12.4 mb/d and 13.1 mb/d in 2020.This represents annual growth rates of 1.6 mb/d and 700 kb/d respectively.By how much growth slows in 2020 will depend on the final capex that US independents deploy,which in turn is related to financial discipline.That said,there is a comfortable inventory of drilled but uncompleted wells to rely on to keep production momentum going,even if drilling programmes are curtailed.Hard to predict technological and productivity advances will have a role to play too,as will drilling practices.For the latter,the closer spacing of new wells to existing ones is lowering their initial production rates and adversely affecting output at neighbouring older wells.As always,estimates for shale supply growth are very price sensitive.In the various studies we have reviewed,indicatively,the breakeven price for the best shales acreages can fall below USD40/bbl.In the Permian,the breakeven is thought to be circa USD45-50/bbl and is higher in lesser basins.As such,our WTI oil price forecast does not present a hurdle for growth.Finally,the depletion rates of the existing production base also shapes the outlook.While US supply growth is influential in the barrel count that goes in establishing a global oil balance on paper,its real influence will come when the US increases its capacity to export oil.We have previously highlighted that pipeline and oil terminal buildout by Q3 2019 should allow for a rise in US oil exports by the year end and into 2020.Even without key pipeline completions,US crude oil exports have regularly topped above 3 mb/d this year(Figure 6).As light US oil reaches international markets in greater volumes,this oil will compete with Brent and related crudes,putting in our view downward pressure on the North Sea benchmark.As the competition intensifies,we think WTIs price will converge with that of Brent from its current deep discount.In addition,as more US light oil reaches the market,the efficacy of OPEC+cuts in stabilising oil prices could be questioned.OPEC+s oil is typically heavier in quality and is thus an imperfect offset to the negative impact on Brent of rising US light oil exports.Oil price on the rise but for a limited time only.For 2019,producer efforts at supply curtailment and unplanned outages will,given resilient oil demand,translate into global implied inventory declines(Figure 6)that will only abate by the end of the year,in our opinion.We therefore expect oil prices to keep trending higher before retreating in Q4.Thereafter,continued OPEC+supply coordination in view of still strong US supply growth,ongoing unplanned outages and more modest oil demand growth in 2020 suggests another,albeit shallower,year of implied global inventory declines in our first look at 2020 balances.As a result,we see a range bound market in 2020,with an annual oil price average near that of 2019.However,OPEC+supply policy,in either increasing or decreasing output,is likely to lag underlying market conditions due to untimely data,which in our view will result in noticeable price variability from one quarter to the next.Iranian and Venezuela and OPEC+policy:As the termination of waivers on Iranian sanctions was announced,the statement from the White House Office of the Press Secretary said that the US,the UAE and Saudi Arabia were committed to global oil markets remaining adequately supplied.We infer from this that these countries may be prepared to offset incremental losses of Iranian oil exports.At the time of writing,there has been no official statement to this effect,nor has there been any statement relative to Venezuelan losses.Currently,Saudi Arabia seems committed in keeping with the December 2018 producer accord.Just last week,Saudi oil minister Al-Falih indicated that there was no need for action.Al-Falih also noted that oil inventories had risen despite sanctions,and that he does not see any change in Saudi crude oil output levels for May.We are of the opinion that OPEC+will not front run upcoming incremental losses in Iran or Venezuela.The producer group is more likely to pursue a supply policy that will be largely data dependent.Until the evidence of the impact of a shortfall in Iranian exports is in the numbers,producers will likely be prudent when it comes raising output.Last year,Saudi Arabia began to increase production prior to the implementation of US sanctions in November,ultimately pushing its production to a peak of 11 mb/d for that month.A repeat of this scenario looks less evident this time around.Al-Falih,in response to the tightening of US sanctions on Iran,indicated that“in the next few weeks,the kingdom will be consulting closely with other producing countries and key oil consuming nations to ensure a well-balanced and stable oil market”.Eventual allowances for unplanned outages in Venezuela and Iran can be achieved without necessarily compromising the current producer accords and thus the Declaration of Cooperation.As indicated above,Saudi Arabia,the UAE or Kuwait have over-delivered in terms of pledged supply cuts.Oil under supply management COMMODITIES Fig.6:Global Implied inventory stock changes(mb/d)Fig.5:US crude oil exports(mb/d)Sources:US EIA,BNP Paribas Sources:IEA(history),BNP Paribas(from Q1 2019 onwards)29/04/2019 Harry Tchilinguirian,Economist Commodities|BNP Paribas Londo