In its recently published, Global Crude Oil Outlook, ESAI Energy asserts that there will be enough crude oil supply in 2019 as long as there are no significant new disruptions. Even with the estimated loss of 1.1 million b/d of Iranian exports, more crude production from the U.S., Brazil. U.K, Russia and the Arab Gulf producers can offset other declines and still meet demand for crude-derived petroleum products.
Refinery throughput, notably, will increase a little faster than demand for crude -derived products as new refineries come on line and as on-spec bunker fuels are produced and put into inventory. This refiner demand will keep the market balanced and perhaps a little tight in the second half of 2019, but it will also lead to petroleum product inventory accumulation that will be bearish later on.
As ESAI Energy has pointed out over the course of the last several weeks, productive capacity in Africa, Latin America and Russia is growing. The possible return of neutral zone production would only add to that capacity. “The bulls are banking on Murphy’s law, that a supply disruption is almost unavoidable, and that Saudi spare capacity will be insufficient,” points out ESAI Energy Principal, Sarah Emerson. “But there are so many other supply developments to consider. 2019 looks manageable.”
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