BNO DBO DNO DTO DWT Games HFIR OIL OILD OILK OILU OILX OLEM OLO SCO SZO UCO USAI USL USO USOD USOI USOU UWT WTID WTIU

OPEC And Non-OPEC Agree To Cut Production By 1.2 Mb/D – What Does It Mean For The Oil Markets?

OPEC And Non-OPEC Agree To Cut Production By 1.2 Mb/D - What Does It Mean For The Oil Markets?

Welcome to the brand new settlement version of Oil Market Every day!

OPEC and non-OPEC producers agreed to chop manufacturing by 1.2 mb/d. This is what the breakdown seems like:

Supply: HFI Analysis

(Observe: Figures for OPEC excludes Qatar from the calculation.)

Remember that utilizing the three businesses common for “call on OPEC”, we get to ~31.5 mb/d for 2019. However as a result of Qatar is now not a member of OPEC, we have to subtract the decision on OPEC determine by ~610okay b/d to ~30.9 mb/d.

That is what manufacturing would appear to be for OPEC in January 2019 utilizing our estimates:

Supply: HFI Analysis

And that is what non-OPEC would appear to be for January 2019:

Supply: HFI Analysis

In complete, the manufacturing distinction in January 2019 versus October/November 2018 are as follows:

Supply: HFI Analysis

By our calculation and assuming Russia does not begin reducing manufacturing by April 2019, complete provides misplaced between OPEC and non-OPEC complete 1.58 mb/d versus October 2018, and a lack of 1.69 mb/d versus November 2018.

Remember that in November 2018, Saudi elevated manufacturing to 11.1 mb/d and Iranian manufacturing falls from three.three mb/d to three mb/d in November 2018. Our estimate is that Iran will fall to 2.eight mb/d by January of 2019 or the place manufacturing was beforehand within the final sanction interval, so complete OPEC manufacturing is predicted to say no to 30.88 mb/d by January 2019.

What does this imply for international oil market balances?

As we defined in our prior report titled, “There Are Serious Risks To Oil Supplies Disappointing In 2019.” The provide delta arising from Canada and Brazil alone complete ~590okay b/d. This will increase the decision on OPEC from 30.9 mb/d to ~31.5 mb/d.

Given the decline we anticipate for H1 2019 from non-OPEC, we will assume ~200okay b/d shall be misplaced (to be protected and accounting for Russia declining solely in Q2 2019). Now taking that under consideration and extrapolating the provides misplaced for 2019, we arrive at one other 100okay b/d of deficit added to the decision on OPEC determine (200okay b/d for half a yr evened out over a yr is 100okay b/d).

This might convey name on OPEC to ~31.6 mb/d.

In fact the idea is that OPEC or specifically Saudi, UAE, and Iraq would hold manufacturing comparatively modest for the again half of 2019 as nicely, however given the place we see manufacturing for January 2019, we expect international balances can be weighed in the direction of a balanced to deficit market.

However the change in sentiment will come quite a bit earlier since Saudi preemptively reduce exports to US already…

The Saudis discovered their lesson from 2016’s OPEC assembly. By ramping up exports earlier than the 2016 assembly, it flooded the world with extra barrels simply because the market was making an attempt to determine the place the OPEC+ reduce was actual or not. The Saudis this time round tanked exports to the US preemptively to regulate the narrative with US crude storage.

We already revealed two items detailing this. Listed here are the articles, article 1, article 2.

Final week’s EIA knowledge confirmed US Saudi crude imports dropping to 730okay b/d and based mostly on tanker monitoring knowledge, we should always see the low import volumes persist going ahead.

As well as, with Saudi Aramco releasing its official promoting worth for January, OSP elevated but once more for the US indicating to us that Saudi will proceed to choke barrels off to the US. Understand that we estimate greater US Saudi crude imports (above 700okay b/d) accounted for 53.eight mbbls of extra crude storage builds within the US. This could quickly reverse.

Conclusion

On a projected international stability foundation, complete provides misplaced in January 2019 versus October might be as excessive as 1.58 mb/d. Whereas the estimates are depending on the velocity of Iranian crude manufacturing falling, we expect the oversupply narrative for 2019 is enormously exaggerated as we defined above. We additionally see a variety of room for provides to disappoint to the draw back particularly within the non-OPEC space.

Writer’s word: Thanks for studying this text. In the event you discovered this text insightful, please depart a “Like” under.

Over the weekend, we revealed our flagship report that included an essential dialogue on the place international oil storage ranges are in the present day and the way we see the present oil market set-up. As well as, we revisited the important thing variables for the lengthy-time period oil bull thesis. We at the moment are at present providing a 2-week free trial to HFI Analysis. In case you are , please see right here for more information.

Disclosure: I/we now have no positions in any shares talked about, and no plans to provoke any positions inside the subsequent 72 hours.

I wrote this text myself, and it expresses my very own opinions. I’m not receiving compensation for it (aside from from Looking for Alpha). I’ve no enterprise relationship with any firm whose inventory is talked about on this article.

window.SA = “App”:”name”:”SA”,”fullName”:”Seeking Alpha”,”type”:”regular”,”host”:”https://seekingalpha.com”,”emailHost”:”https://email.seekingalpha.com”,”pro”:false,”proPlus”:false,”contributorCenter”:false,”realHostName”:”https://seekingalpha.com”,”isCms”:false,”cancelPV”:false,”isSharkPreview”:false,”usersOnSite”:”7,164,146″,”assetHosts”:[“https://static.seekingalpha.com”,”https://static1.seekingalpha.com”,”https://static2.seekingalpha.com”,”https://static3.seekingalpha.com”],”moneData”:”params”:”subscribe_color=control”,”assetHost”:”https://static.seekingalpha.com”,”userEchoHost”:”https://feedback.seekingalpha.com”,”env”:”dev”:false,”staging”:false,”production”:true,”test”:false,”gaAccountId”:”UA-1466493-1″,”comscoreAccountId”:8500672,”fbAppId”:”624608951014846″,”twitterAccountName”:”SeekingAlpha”,”rollbarToken”:”5edf110be2fc4cecb32637fc421111e2″,”perimeterXAppId”:”PXxgCxM9By”,”embedlyKey”:”a6da93fdfc49472099ce63260954716b”,”mp”:false,”chat”:”host”:”https://rc.seekingalpha.com”,”pageConfig”:”Refresher”:”active”:false,”Data”:”article”:”id”:4227082,”title”:”OPEC And Non-OPEC Agree To Cut Production By 1.2 Mb/D – What Does It Mean For The Oil Markets?”,”stub”:false,”primaryTicker”:””,”primaryIsCrypto”:null,”isTranscript”:false,”isSlides”:false,”twitContent”:”OPEC And Non-OPEC Agree To Cut Production By 1.2 Mb/D – What Does It Mean For The Oil Markets? https://seekingalpha.com/article/4227082-opec-non-opec-agree-cut-production-1_2-mb-d-mean-oil-markets?source=tweet”,”isProArticle”:false,”isProPaywall”:false,”paywallReason”:null,”isArchived”:false,”inEmbargo”:false,”is_wsb”:false,”isAuthorNewsletter”:false,”titleTest”:null,”archiveOn”:zero.zero,”isProNoEmbargo”:false,”url”:”https://seekingalpha.com/article/4227082-opec-non-opec-agree-cut-production-1_2-mb-d-mean-oil-markets”,”isFreeMpArticle”:true,”isFreeProArticle”:null,”isInsight”:false,”insightSlug”:””,”price_at_publication”:null,”themes”:[“commodities”,”sa-exclusive”,”alternative-investing”,”article”],”from_liftigniter”:false,”isAnyProArticle”:false,”allowMpPromotion”:true,”article_datetime”:”2018-12-07T15:26:22.000-05:00″,”isEtf”:false,”taggedUrlsHtml”:”u003cspan itemscope itemtype=’http://data-vocabulary.org/Breadcrumb’u003eu003ca href=’https://seekingalpha.com/analysis/macro-view/all’ sasource=’article_navigation’ itemprop=’url’u003eu003cspan itemprop=’title’u003eMacro Viewu003c/spanu003eu003c/au003eu003c/spanu003e, u003cspan itemscope itemtype=’http://data-vocabulary.org/Breadcrumb’u003eu003ca href=’https://seekingalpha.com/analysis/macro-view/commodities’ sasource=’article_navigation’ itemprop=’url’u003eu003cspan itemprop=’title’u003eCommoditiesu003c/spanu003eu003c/au003eu003c/spanu003e”,”isFidelityEducationPage”:false,”contentData”:null,”marketingBullet”:”Looking for a community to discuss ideas with? HFI Research features a chat room of like-minded investors sharing investing ideas and strategies. u003ca href=’/checkout?service_id=mp_735′ sasource=’mp_marketing_text_top’u003eStart your free trial today »u003c/au003e”,”author”:”id”:40391,”userId”:5006891,”slug”:”hfir”,”exclusiveResearch”:”title”:”HFI Research”,”short_pitch”:”Finding the next big contrarian bet. Current Focus – Energy and Value.”,”id”:735,”tagId”:92601,”name”:”HFIR”,”picture_url”:”https://static3.seekingalpha.com/images/users_profile/005/006/891/big_pic.png”,”is_brand_author”:false,”show_managed_account”:false,”comments”:”discussion_status”:zero,”discussion_message”:”Comments disabled for this article”,”brand”:null,”firstResearchAuthor”:”id”:40391,”slug”:”hfir”,”pageType”:”article”,”articleModeratedMsg”:null,”Ads”:”slots”:[“container”:”article-left-slot-2″,”data”:”name”:”/6001/sek.analysis/market-outlook/commodities”,”disable_collapse_empty_div”:false,”targeting”:”tile”:160,”size”:[[160,600],”fluid”],”str”:”160×600,fluid”,”container”:”article-left-slot-3″,”data”:”name”:”/6001/sek.analysis/market-outlook/commodities”,”disable_collapse_empty_div”:false,”targeting”:”tile”:162,”size”:[[160,600],”fluid”],”str”:”160×600,fluid”,”delay”:true,”whenOutOfView”:”article-left-slot-2″,”container”:”article-right-slot-1″,”data”:”name”:”/6001/sek.analysis/market-outlook/commodities”,”disable_collapse_empty_div”:false,”targeting”:”tile”:1,”size”:[[300,250],[300,600],”fluid”],”str”:”300×250,300×600,fluid”,”cls”:”mb25″,”flex”:true,”container”:”article-right-slot-2″,”data”:”name”:”/6001/sek.analysis/market-outlook/commodities”,”disable_collapse_empty_div”:false,”targeting”:”tile”:100,”size”:[[300,100]],”str”:”300×100″,”cls”:”mb25″,”container”:”article-right-slot-3″,”data”:”name”:”/6001/sek.analysis/market-outlook/commodities”,”disable_collapse_empty_div”:false,”targeting”:”tile”:2,”size”:[[300,252],”fluid”],”str”:”300×252,fluid”,”cls”:”mb25″,”native”:true,”container”:”article-middle-slot-1″,”data”:”name”:”/6001/sek.analysis/market-outlook/commodities”,”disable_collapse_empty_div”:false,”targeting”:,”size”:[[640,40]],”str”:”640×40″,”container”:”instream_recommendation_ad”,”data”:”name”:”/6001/sek.analysis/market-outlook/commodities”,”disable_collapse_empty_div”:false,”targeting”:”tile”:50,”size”:[[3,3],”fluid”],”str”:”3×3,fluid”,”delay”:true,”delta”:500],”testScroll”:true,”disabled”:false,”kvs”:”d”:[“analysis”,”macro-view”,”etfs”],”t”:[“market-outlook”,”commodities”,”sa-exclusive”,”alternative-investing”,”article”],”aid”:”4227082″,”a”:”hfir”,”cnt”:[“8″,”oil”,”fed”,”taxes”,”fnk1″,”fnk2″],”ldr”:”commodities”,”mp_free_article”:”true”,”s”:[“uso”,”oil”,”uwt”,”uco”,”dwt”,”sco”,”bno”,”dbo”,”dto”,”usl”,”dno”,”olo”,”szo”,”olem”,”wtiu”,”oilk”,”oilx”,”wtid”,”usoi”,”usou”,”usod”,”oild”,”oilu”,”usai”],”ab_subscribe_color”:”control”,”Paths”:”int”:”adsAPI”:”src”:”https://static3.seekingalpha.com/assets/api/ads-0cf8a56f1d93653afa4e33f67b12af5def2cb05353be15eeceffef0ad3d63d2f.js”,”id”:”sa-ads-api”,”ext”:[“src”:”https://js-sec.indexww.com/ht/p/183642-162053219843577.js”,”id”:”ie”,”src”:”https://www.googletagservices.com/tag/js/gpt.js”,”id”:”gpt”,”src”:”https://sb.scorecardresearch.com/beacon.js”,”id”:”sb”,”src”:”https://ssl.google-analytics.com/ga.js”,”id”:”ga”,”src”:”https://connect.facebook.net/en_US/sdk.js”,”id”:”facebook-jssdk”],”lastRequested”:”2018-12-07 15:37:19 -0500″,”SlugsPrices”:”disabled”:false,”proOpenHouse”:”active”:false,”end_date”:”2017-03-20T06:00:00.000-04:00″,”proFlashSale”:”active”:false,”end_date”:”2017-03-23T00:00:00.000-04:00″,”saSource”:null,”name”:”article”,”useSQuoteBackup”:null,”headerConfig”:”noNotificationsMenu”:null,”nonFixed”:null,”tabless”:null,”activeTab”:”market-outlook”,”modules”:,”requires”:[],”trackq”:[],”exceptions”:[],”gptInit”:false;