Macro Oils short-term outlook: October 2019 Report

Commodity Market Report 04 October 2019

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Report summary

The 14 September attack on Saudi Arabia’s Abqaiq and Khurais oil facilities took nearly 6 million b/d of oil production out of the market. Despite that, Saudi Arabia met its commitments to term customers. Production capacity was restored to 11.3 million b/d by early October, as confirmed by the new Energy Minister Prince Abdul Aziz. For the market, the prompt restoration of supply was reassuring, and prices quickly fell back to pre-attack levels. That was followed by a further drop to the high $50s for Brent as October started. What lies ahead for prices? In this Monthly Update, we extend our supply, demand and quarterly price forecast through 2021. Highlights of the report include: -Saudi production recovery -Global recession risk to demand -Slowing US supply growth -Sharp fall in 2019 OPEC production

Global supply: short term forecast extended to 2021
Non-OPEC: US slowdown continues through 2021
US Lower 48: Permian remains the key growth area in 2021
OPEC: 2021 output remains flat as producers continue adherence to cuts
Global liquids demand growth: 0.7 million b/d in 2019; 1.4 million b/d in 2020; 1.0 million b/d in 2021
Various forces beyond macro economy restrain demand growth in 2019
Unusually low H1 2019 demand growth affected by one-time factors
- Conservative outlook for H2 2019 and 2020 demand
- Global recession scenario for 2020-2021: a possible reduction in global demand by 1.1 million b/d