GLOBAL OIL DEFICIT
A global crude oil deficit will develop before the end of this year, the chairman of Facts Global Energy consultancy Fereidun Fesharaki said Monday.
In his opening keynote speech at the Middle East Petroleum and Gas Conference in Abu Dhabi, Fesharaki also said medium-term crude price recovery was a given as the market moved towards balance, although there could still be another short-term price dip.
"The oil markets will self-correct. Within two to three years, prices will rise to $60-$80/b range. this is inevitable," he told delegates.
Fesharaki predicted that global oil supply would fall worldwide by at least 500,000 b/d in 2016, while demand would rise by around 1.4 million b/d, noting that he was "optimistic" on global oil compared to some other organizations, such as International Energy Agency, on the strength of strong upturns in demand for gasoline in China, India and the US.
By 2020, global demand for crude would increase by over 5 million b/d, Fesharaki predicted.
"Supply will have problems catching up without a price increase," he added.
On the products side, Fesharaki was especially bullish about the global outlook for gasoline, although the current glut of diesel supply was likely to persist due to sluggish demand growth combined with recent refinery and upcoming refinery additions -- including a large planned new refinery in Kuwait -- that were designed to increase diesel yield relative to other refined products.
Addressing the question of Libya's return to the international oil market after years of civil unrest, Fesharaki said market re-balancing could be delayed by 12 months if Libyan oil production returns to pre-revolutionary levels in the short term, stretching out to 2018-19.
Turning to the role of OPEC and oil production kingpin Saudi Arabia, he said both were likely to agree to "manage the market in a [price] range" if they thought this was achievable and circumstances were right. That probably would not be before 2017, he added.
Indeed, Fesharaki said the long-term average oil price trend would be the same, with or without OPEC. However, the group's intervention could damp market volatility.
In an opening address to the conference, UAE energy undersecretary Matar al-Neyadi said the UAE strongly supported OPEC's role as a supranational body supporting the international petroleum sector, especially in oil-producing nations.
"We believe that OPEC continues to have an important role in the petroleum industry," he said.
Recently appointed Abu Dhabi National Oil Co.'s marketing and refining director Abdulla al-Dhaheri said he expected oil prices to remain volatile in the short term but to recover in the medium term. An average of $50/b for benchmark crudes in 2016 was "achievable," he said.
As a result of long-term planning, ADNOC aimed to increase its refined products output capacity and would start production of several new products -- including base oil types 2 and 3, carbon black and petcoke -- following the recent expansion of its Ruwais refinery.
That would strengthen Abu Dhabi's presence in international markets, he said.
Abu Dhabi is the leading UAE emirate, with more than 95% of the nation's oil reserves and production.
The Ruwais refinery expansion, which more than doubled the size of the UAE's largest petroleum refinery to 840,000 b/d, was completed in November 2015.
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AN - China National Offshore Oil Corp. (CNOOC) is willing to invest $3 billion in its existing oil and gas operation in Nigeria, the Nigerian National Petroleum Corporation (NNPC) said on Sunday following a meeting with the Chinese in Abuja.
REUTERS - Production at Libya’s giant Sharara oil field was expected to fall by at least 160,000 barrels per day (bpd) on Saturday after two staff were abducted in an attack by an unknown group, the National Oil Corporation (NOC) said.
IMF - Output grew by 3.8 percent in 2017, underpinned by a resilient non-hydrocarbon sector, with robust implementation of GCC-funded projects as well as strong activity in the financial, hospitality, and education sectors. The banking system remains stable with large capital buffers. Growth is projected to decelerate over the medium term.
IMF - Higher oil prices and short-term portfolio inflows have provided relief from external and fiscal pressures but the recovery remains challenging. Inflation declined to its lowest level in more than two years. Real GDP expanded by 2 percent in the first quarter of 2018 compared to the first quarter of last year. However, activity in the non-oil non-agricultural sector remains weak as lower purchasing power weighs on consumer demand and as credit risk continues to limit bank lending.