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FORESIGHT 2020

A turbulent year ahead for oil?

By Alan Gelder, VP Refining, Chemicals & Oil Markets, and Ann-Louise Hittle, Vice President, Oils Research

This article features key points from the report, Oils: 5 things to look for in 2020. Fill in the form on this page to get our full analysis and predictions for the year ahead.

What will our analysts be watching in the year ahead?

  1. Has a global recession been averted? Will oil demand recover?
  2. Belt-tightening for US tight oil
  3. How will IMO regulations affect oil product prices?
  4. US oil and LPG exports set to boom

This article features key points from the report, Oils: 5 things to look for in 2020. Fill in the form on this page to get our full analysis and predictions for the year ahead.

By Alan Gelder and Ann-Louise Hittle

Will the global economy stabilise in 2020?

There are clear signs that the global economy is stabilising. Leading indicators for manufacturing have improved; Germany and the UK avoided technical recessions towards the end of last year, and major central banks are using limited policy space to add stimulus. But there are still risks at play: our forecast predicts the global economy will grow only modestly in 2020.

How will sluggish growth affect the global oil market?

We expect global liquids demand to grow 1.4 million b/d. Although this number seems healthy, just under half of it originates from “technical demand” – meaning that underlying growth will remain relatively modest.

Has tight oil reached a tipping point?

In 2019, US Lower 48 onshore production grew by 1 million b/d; in 2020, that figure will be cut in half. What’s driving this downward trend? The days of splashy well results and pumped-up production targets are behind us. Capital discipline is the prevailing message from operators as investors demand financial prudence. 

What else can we expect from tight oil in 2020? Download Oils: 5 things to look for in 2020 to find out more. 

Shipping fuel shake-up as IMO 2020 kicks in

The much-anticipated IMO 2020 marine fuel quality regulations came into force on 1 January 2020. The industry has been debating its impact since the change was first agreed in 2016. But there are still several uncertainties: what will the level of compliance be? How many ships will opt to install scrubbers, and how will this affect the take-up of high sulphur fuel oil? Will enough compliant low sulphur fuel be available to meet demand? Download our insight for a comprehensive analysis of how we think IMO will influence the oil market this year.

US LPG exports climbing to new heights

US NGL production continues to grow in leaps and bounds. And almost all the LPG supply growth is translating into exports. NGL infrastructure is expanding to keep pace with supply. Our forecasts show that export capacity will grow by a massive 70% by the end of this year. 

How much supply can be absorbed globally and at what price? Read Oils: 5 things to look for in 2020 to find out more. 

US Atlantic basin gasoline demand – on its way down?

The US closed 2019 with negligible year-on-year gasoline demand growth. With light vehicle fleet efficiency continuing to improve, could 2020 be the start of structural gasoline demand decline?