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Home > Energy Week > Episode 48 - How deep will OPEC cut? | Dr. Dean Foreman, chief economist from API returns
Podcast: Energy Week
Episode:

Episode 48 - How deep will OPEC cut? | Dr. Dean Foreman, chief economist from API returns
Category: Government & Organizations
Duration: 00:47:20
Publish Date: 2018-11-13 15:45:05
Description: Contact the show: 318-599-9192 https://www.api.org/products-and-services/statistics/apis-economic-industry-outlook https://www2.argusmedia.com/en/news/1790487-opec-jmmc-committee-mulls-cuts-on-demand-concerns?backToResults=true https://www.wsj.com/amp/articles/opec-edges-closer-to-production-cut-as-saudis-russia-signal-intent-1541956957 https://www.reuters.com/article/us-oil-opec-russia-supply/russias-novak-oil-oversupply-in-next-few-months-seasonally-driven-idUSKCN1NG0J3 https://www.reuters.com/article/us-oil-opec-oman/oman-oil-minister-says-majority-of-opec-and-its-allies-support-cut-idUSKCN1NG07S What will OPEC do? Will they cut production? Novak does not see over production, he says this is a seasonal surplus. Saudi Arabia is talking about taking 500,000 bpd out of exports, not necessarily from production. They could put that oil into storage, which has been depleted. President Trump tweeted that he hopes OPEC and Russia don't cut oil production because prices should be lower. Interesting, because oil prices are lower and even lower prices could hurt the U.S. oil industry. Dean Foreman, chief economist from API Findings and highlights: New records for month of October for gasoline demand and in liquid feedstocks for petrochemicals. Refineries and petrochemicals producing at record level for month of October. "U.S. petroleum demand in October of 20.8 million barrels per day (mb/d) was the strongest for the month since 2006 and a continued reflection of solid economic activity." - This is in contrast too many of the forecasts we are seeing that show declining demand growth for oil. Much of that is attributed to an expected slowdown in global economic activity. Is the U.S. an exception? Or is October 2018 an anomaly? September data showed softness on demand side but October data shows a rebound in exports and in demand. This isn't to say that all the economic news will continue to hit on all cylinders, and GDP growth has been growing a lot. We could see slowing growth in the future. The EIA has shifted to its forecast to show a global surplus in oil market. Gasoline and oil - Oil is the top factor going into oil prices but it doesn't always correlate week to week. In fact, gasoline prices remained steady even when oil prices went up. Can't predict where this will go but because production numbers for gasoline and oil are so strong, US consumers will continue to be cushioned. Jet fuel - jet fuel delivers up 3.7% in October from August. Solid demand growth and seasonal patterns. Very solid. Year to year things are still up. Jet fuel demand is a good indicator of global economic activity. Not just travel but also shipping and consumer confidence. Financial market volatility could impact the real economy and consumption. How crucial is it for refineries to continue running at full levels? Definitely highest throughput in October that we've seen. As long as demand is strong we need to see throughput high. Much more efficient in terms of the supply chain than importing products. Fewer total refineries but high capacity from refineries that we have. Fewer outages. Investments and improvements in monitoring have prevented outages from occurring. Six refineries have actually closed but total capacity has actually increased. Investments in distillation capacity to be able to use more light crude. This is happening not just in smaller refineries near shale patch but also in bigger refineries, like ExxonMobil's refinery in Baytown. Keystone XL Pipeline: commitment from the administration but for every step forward another step back. More delays but hopefully it won't kill the project because it will really help the US and Canadian markets. There is a need for it in the market, especially for integration between the US and Canadian industries. "We've got a really good market share fight between the US and global producers."
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