Upload
griselda-walton
View
214
Download
0
Tags:
Embed Size (px)
Citation preview
Copyright 2002 Global Insight, Inc.
Post-War Oil Markets: Everything Is OK, Right?
Dennis Eklof - Executive Managing Director,
Global Energy
Bruce Cavella – Senior Economist
June 12, 2003
2Copyright 2003 Global Insight, Inc.
Global Oil Markets 2003½ : Where Do We Stand?
Little damage to Iraqi oil infrastructure from war. Demand Growth: SARS, weak economic environment:
wait until next year. Non-OPEC: The taps are WIDE OPEN. OPEC: The taps are (nearly) WIDE OPEN. Prices: Prices fell prior to and during war, but bombings
in Riyadh, low inventories, and slow Iraqi recovery have pushed up prices.
The Outlook: Low inventories, slow Iraqi return, natural gas worries in the United States, and production adjustments by OPEC will support prices in coming months.
3Copyright 2003 Global Insight, Inc.
Global Oil Markets 2003½ : Where Have We Been?
15
20
25
30
35
40
9/4/01 12/28/01 4/22/02 8/12/02 12/2/02 3/25/2003
Market re-opens following 9/11
Russia rejects export cuts
OPEC quota cut
Escalation of Arab/Israeli violence, Iraq halts exports
Venezuelan Strike
Anticipation, beginning, and end of war in Iraq
Weapons inspectors return to Iraq
U.S./Iraqi Rhetoric Heats Up
4Copyright 2003 Global Insight, Inc.
Global Oil Markets 2003½ : Where Do We Stand?Demand Growth Stronger in 2004
-1,500
-1,000
-500
0
500
1,000
1,500
2,000
2,500
Asia
Africa
Mideast
Russia
Europe
L. America
N. America
Total World
Thousand Barrels per Day
1.1%
1.9%
0.4%
5Copyright 2003 Global Insight, Inc.
Natural Gas Prices: Supporting Limited Oil Demand Growth
Current US short to mid-term gas/oil switching capacity about 0.65 to 0.70 mbd
At least two thirds has already switched, a major factor contributing 0.5 mbd to recent growth in resid and distillate demand
High gas prices almost certain to continue through 1H2004 so some additional switching possible
Important long-term issue is whether higher long-term gas prices will provide oil demand growth or merely reduced industrial activity and import substitution
6Copyright 2003 Global Insight, Inc.
US Natural Gas Prices: Continued Upward Trend for Now
Monthly and Long-term Average Natural Gas Spot Prices(Henry Hub)
0
2
4
6
8
10
12
Jan
-87
Jan
-88
Jan
-89
Jan
-90
Jan
-91
Jan
-92
Jan
-93
Jan
-94
Jan
-95
Jan
-96
Jan
-97
Jan
-98
Jan
-99
Jan
-00
Jan
-01
Jan
-02
Jan
-03
Dollarsper
MillionBTU
$1.62 $2.18 $4.06
Forecast Average Price Range for June 03 Through December 04
7Copyright 2003 Global Insight, Inc.
Global Oil Markets 2003½ : Where Do We Stand?OECD Commercial Stocks and Forward Supply
2.3
2.4
2.5
2.6
2.7
2.8
Jan90
Jul91
Jan93
Jul94
Jan96
Jul97
Jan99
Jul00
Jan02
Jul03
Billion barrels
30
40
50
60
70
80
Days
OECD Commercial Stocks (left scale)
Forward Supply (right scale)
8Copyright 2003 Global Insight, Inc.
Global Oil Markets 2003½ : Where Do We Stand?Non-OPEC Production Growing
Non-OPEC production growing by nearly 1 million b/d this year.
Growth in non-OPEC production meets all of expected demand growth in 2003.
Non-OPEC production increases by nearly 1 million b/d again in 2004.
Little room for OPEC-10 to expand production in 2004 particularly with return of Iraqi oil.
9Copyright 2003 Global Insight, Inc.
Non-OPEC Production Growth
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
2001 2002 2003 2004
Million Barrels per
Day
Canada
Mexico
N. Sea
Russia
US
Other
10
Copyright 2003 Global Insight, Inc.
Iraqi Oil Production
Iraqi Oil Production
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Sep98
Sep99
Sep00
Sep01
Sep02
Sep03
Barrels per Day
11
Copyright 2003 Global Insight, Inc.
Global Oil Markets 2003½ : Where Does OPEC Stand?
OPEC, OPEC-10 Share of Global Market
32%
34%
36%
38%
40%
42%
44%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
OPEC OPEC-10
12
Copyright 2003 Global Insight, Inc.
Global Oil Markets 2003½ : OPEC Continues To Manage the Market and Prices
5
10
15
20
25
30
35
40
Apr97
Oct97
Apr98
Oct98
Apr99
Oct99
Apr00
Oct00
Apr01
Oct01
Apr02
Oct02
Apr03
Dollars per barrel
OPEC Quota Decrease OPEC Quota Increase
13
Copyright 2003 Global Insight, Inc.
OPEC Basket Price
OPEC's Basket Price
16
18
20
22
24
26
28
30
32
May00
Nov00
May01
Nov01
May02
Nov02
May03
Dollars per Barrel
OPEC's target range
14
Copyright 2003 Global Insight, Inc.
“OPEC Taps Are Open And Oil Is On The Way!” – March teleconference.
Saudi Arabia chartered 20-25 ships to bring extra crude to market in mid- to late-January and again in late March.
Six-week sailing time to the U.S. meant that a wave of oil was on the way.
15
Copyright 2003 Global Insight, Inc.
Where Is the Oil?
Oil may be “slow-steaming”. Oil may have been diverted to
Caribbean storage or to other destinations.
16
Copyright 2003 Global Insight, Inc.
Global Oil Markets 2003½ : Where Do We Stand?U.S. Commercial Stocks and Forward Supply
0.8
0.9
1.0
1.1
1.2
Jan95
Jan96
Jan97
Jan98
Jan99
Jan00
Jan01
Jan02
Jan03
Billion barrels
30
40
50
60
70
Days
U.S. Commercial Oil Stocks (left scale)
Forward Supply (right scale)
17
Copyright 2003 Global Insight, Inc.
Near-Term Price Scenarios
WTI Price Scenarios 6/03
18
20
22
24
26
28
30
32
34
36
38
1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05
Dollars per barrel
Slow Return of Iraqi Oil and a Disciplined OPEC-10
Gradual Return of Iraqi Oil, Moderate Discipline by OPEC-10
Quick Return of Iraqi Oil, Too Much From OPEC-10