23 Apr 2018
Energy industry experts and customers gathered in Houston and Calgary to explore a range of North American oil topics at the annual Oil Forum Series. Here are some of the main talking points.
- The Oil Forum events in Houston and Calgary featured contributions from Argus Media, Genscape, S&P Global Platts and IIR Energy.
- U.S. oil production is in a growth pattern, which is expected to continue over the next two years given the current price environment.
- Exports helped to clear some of the additional production, but bottlenecks prevented U.S. exports from setting new highs.
The forum features market insight from keynote speakers followed by a panel discussion on the issues that matter to our customers in North America.
From the outlook on production to crude pricing, here is a snapshot of some of the topics discussed in Houston and Calgary.
The Calgary session
The Calgary Forum was hosted by Carl Larry, Commodities Market Specialist.
Jodi Quinnell and Mike Walls, of Genscape, gave a North American oil market update. Among their key takeaways, they said that Canadian production growth remains steady, despite clear near-term transportation constraints.
The oil market is also sensitive to any pipeline issues/interruptions in the near term, while any further pipeline delays will only enhance the issue.
They added that U.S. oil production is in a growth pattern, which is expected to continue over the next two years given the current price environment.
Meanwhile, production in the Permian basin is expected to climb to 3.9 MMb/d by year end 2018, although the transportation constraints and an insufficient amount of frac crews could impede growth.
Dave Elpers, of IIR Energy, then spoke about demand forecasting and refining’s role in the appetite for oil. He pointed out that:
- Electricity generation is moving toward renewables.
- Oil demand growth remains positive.
- Eastern Hemisphere grassroots construction, global heavy oil destruction, Western Hemisphere in-plant additions, slate change and regulation will all impact turnarounds in the coming years.
Esa Ramasamy, of S&P Global Platts, gave his insight on crude pricing. His key takeaways included:
- Western Canadian crudes need to be priced vs competing crudes, i.e., Latam super heavy sour.
- There is a new oil order.
In the search for export route, Canadian producers may want to think of investing in pipelines such as Caine, whose reversal would offer Canadian crudes an export route through LOOP.
At both events, Joshua Starnes, Oil Research Manager, went over his thoughts on the supply and demand outlook for 2018. His key findings were:
- Crude and products slowly balancing.
- Canada production continuing to grow.
- U.S. storage is still tightening but not quickly.
- Export demand will continue to grow in 2018.
The Houston session
The Houston event was held on 5 April, with a similar format to the Calgary event.
Jeff Kralowetz from Argus Media spoke about U.S. Gulf crude pricing and exports.
His key takeaways included:
- Global benchmarks will align crude with areas of strong demand. Expect a WTI discount to Brent to persist.
- U.S. Gulf coast pipeline markets are exceptionally liquid and transparent.
- A true fob market would require standardization and reporting of cargo deals.
- Meantime, U.S. Gulf coast pipeline markets provide clear price signals for exports.
- The Gulf coast prices incorporate the very liquid Nymex Cushing price and add a traded differential to reflect precisely the value at the coast.
Hillary Stevenson from Genscape then discussed transportation and production impacts on North American crude inventories.
- Genscape oil production data shows that U.S. and Canadian production increased more than 1.3mn bpd over the last 12 months.
- Growing exports helped clear some of the additional production, but bottlenecks between the producing areas (Permian and Western Canada) and export locations at the coasts prevented U.S. exports from making new highs.
- Permian and Western Canadian production bottlenecks led to increasing inventories.
The Oil Forum Series are proprietary events that allow our customers to listen to presentations, ask questions during a Q&A panel and network with industry peers.
Christopher Brisch, Head of Market Development for Commodities for the Americas said: “The Oil Forum Series offers guests the unique opportunity to directly interact and gain insight from our Oil Research team and experts from our partners at Argus Media, Genscape, S&P Global Platts and IIR Energy.
“It has become an annual must-attend event.”