Energy Market Research

Oil market “balances are heading in the right direction” yet stockpile draws concentrated in refined products “will do little to silence the bears,” consultant Energy Aspects said in a report published on March 30. “As the market stands now, only crude stock draws will help prices break out of the current range-bound trading,” it said. The market is excessively worried that OPEC will not extend the output curbs deal. OPEC is “fully aware that running down inventories will take more than six months,” it said. The consultant also assured readers of the report that the growth in the production of US shale oil will not prevent stockpile declines this year.
Morgan Stanley
Although US crude inventories continue to increase, “less visible” oil stockpiles are seen going down by 72 million barrels globally this year, Morgan Stanley said in a report published on March 31. It cited US data from EIA, other OECD members’ data from the IEA, and China’s data from Xinhua news agency. The bank expects crude oil stored in floating storage down almost 50 percent to 52 million barrels. Total oil stocks in Japan, Singapore and the Amsterdam-Rotterdam-Antwerp hub are seen down by 10 million barrels.
BMI
Growth of renewable energy in France is not sufficient for the European nation to lower its dependence on nuclear power, BMI Research said in note on March 30. Plans to cut the nuclear share of total generation to 50 percent by 2025 will have too significant an impact on energy security, BMI said. It expects nuclear plants to make up 71.9 percent of generation in 2026 vs. 73.4 percent in 2016, as the lifetime of reactors will be extended. The installed capacity of renewables from mainly wind and solar is to increase to 60 GW by 2025 in the best-case scenario; this would only be able to meet 27 percent of forecasted 2025 power demand assuming an average capacity factor of 24 percent, BMI said.
Citi
Citibank sees a tighter oil market and expects OPEC to extend its cut deal when it expires in June. The US shale growth “could surprise to the upside” but growth is likely to be focused in the second half of this year, keeping the market tighter in the second quarter, Citigroup analysts including Ed Morse, global head of commodities research, wrote in a note on March 28. Oil markets are expected to tighten, especially in the second quarter, as crude and product demand begin to pick up seasonally, while non-OPEC supplies continue to decline, it said. OPEC and non-OPEC nations are likely to extend the production cuts in the second half as needed to support prices, the bank said.
Societe Generale
The bank sees OPEC likely to extend its agreement to curtail the output cut at the next meeting. While the producer group is likely to roll over its production target in the second half of 2017, the actual output may increase significantly, Societe Generale analyst Mike Wittner said in a note dated March 28. OPEC’s second-half production will be 500,000 barrels a day higher than the second quarter. “It is critical for OPEC that the oil markets see it is continuing active supply management,” the note said.

Source: Arab News