North America Crude Markets short-term outlook: October 2022

Expected looming backwardation in the Brent term structure ahead of the impending EU embargo on Russian crude at year end along with cratering light distillate cracks is weighing on US coastal light sweet pricing. However, looking ahead to a tighter-than-previously-expected global market we anticipate continued robust US export volumes despite gasoline pricing weakness particularly into the European market. In this outlook we roll out our view to 2024 and highlight the continued grind higher in US production to the tune of ~600 kb/d y-o-y in the face of expected on going producer capital restraint and focus on cash-return yields over production growth rates. Other topics addressed in this report include: • Unveiling our 2024 price and differential outlook • Inflection point in North American midstream utilization • WCSB market dynamics post TMX in-service