Trading and Risk

Four Crude Forecasts That Caught Our Attention at the Energy Trading Risk Summit

byBernadette Johnson

The global crude market is due to turn back toward oversupply in 2020. What does this mean for WTI prices and rising U.S. crude exports?

At the inaugural Alpha Insight Energy Trading Risk Summit in Houston last week, we took the audience through four important implications that the coming supply surplus will mean for crude markets.

1. $56/bbl makes sense for WTI crude in 2020

In a $70/bbl scenario, U.S. crude production would soar to 18 MMBbl/d by 2025, according to our ProdCast data. That’s too strong. Due to a mismatch in global crude quality demands, the rest of the world is unwilling and unable to absorb so much U.S. crude.

2. The market has come to terms with lower for longer pricing

Last year, U.S. crude production grew by about 2 MMBbl/d. From 2018 to 2019, output growth will be half as strong. This comes with the territory of growing supply from outlets like Brazil, North Sea, and some OPEC producers. The market has settled into the pricing environment implications.

3. U.S. exporters are taking an unsustainable haircut on crude sales

Since the start of the trade war with China, U.S. crude exporters have lost market share as Chinese buyers look elsewhere for supply. Global trade dynamics typically allow for waterborne cargo reshuffling, but the shifts can be expensive for U.S. exporters.

4. U.S. crude production is only getting lighter in gravity

It’s no secret that the bulk of U.S. crude production growth coming online is light, sweet WTI. ProdCast estimates show production of crude with 42-50 degree API gravity will rise to 6 MMBbl/d by 2025. This presents a mismatch for what’s needed for the rest of the world. Could the demand disparity hurt production growth?

All of the fundamental analysis here is possible with ProdCast from Enverus Trading & Risk. Want to take a spin and use ProdCast as a market intelligence tool? Sign up for a free trial to see the difference for yourself.

Bernadette Johnson

Bernadette Johnson

Bernadette Johnson joined Enverus through the acquisition of products and services from Ponderosa Energy. She serves as Vice President of Strategic Analytics for Enverus and is responsible for helping to grow and expand Enverus’ analytics offerings, building on the work she did at Ponderosa Energy leading consulting engagements and research efforts. With nearly 10 years experience in the energy industry, Bernadette has earned the reputation of industry expert with extensive experience providing crude, natural gas, and NGL fundamentals analysis and advisory services to various players in the North American and Global energy markets. A regular commentator for and speaker to the energy industry, her specific market involvement spans: financial trading, production forecasts, infrastructure analysis, midstream analysis, storage value analysis, and price forecasts. Prior to joining Ponderosa, and now Enverus, Bernadette was Senior Research Analyst for Sasco Energy Partners in Westport, CT where she provided analytics and research support for a team of financial traders active in natural gas, power and oil futures markets. Bernadette began her career with BENTEK Energy, LLC as a Senior Energy Analyst, Natural Gas Market Fundamentals and consulting project team lead.

Subscribe to the Enverus Blog

A weekly update on the latest “no-fluff” insight and analysis of the energy industry.

Related Content

energy-transition-group-of-professionals-meeting
Energy Transition
ByAlex Nevokshonoff

Each hub developed a unique hydrogen production strategy that was chosen to best utilize the regionally available resources such as renewable energy type and quality, nuclear availability, existing infrastructure and carbon sequestration basin viability.

OFS-banner-485926689 (1)
Intelligence
ByErin Faulkner

Nearly a decade ago, Enverus, then known as DrillingInfo, posted a Gulf of Mexico (GOM) primer on its blog. It remains one of our most popular posts. A few things have changed since 2014, so we decided it was time...

Electric Vehicle Charging
Energy Transition
ByPrashant Kumar

The electric vehicle (EV) and plug-in hybrid EV markets are experiencing significant growth in North America, Europe and China. The surge in demand has prompted notable advancements in battery technology to cater to the expanding market.

Oil-drilling-women-energy
Energy Analytics Financial Services
ByTucker Keren

The North American play-level inventory rankings are in, and there’s been some shakeups. After almost a year since the last publication by Enverus Intelligence Research (EIR), the remaining inventory by play has seen some movement on the leaderboards. While EIR...

Enverus Blog - What you should know about the future of mineral acquisitions
Minerals
ByPhillip Dunning

Take the guess work out of providing your family insights into the estate and be empowered to manage your assets.

midstream-post
Intelligence Midstream
ByErin Faulkner

Midstream operators connected 3,524 oil and gas wells to gathering systems in the U.S. during Q2, according to an analysis using Enverus Core data presented in the most recent issue of Midstream Pulse. This is up slightly from the 3,447...

energy-transition-research
Energy Transition Financial Services
ByEnverus

The shift away from hydrocarbons and towards renewable and low-carbon technologies is not only changing the way we power our lives, but also offers a wealth of investment opportunities for those who can decipher the complex landscape. Traditional institutional investors...

Enverus Blog - Analyst Takes: Looking back at March energy trends
Analyst Takes Trading and Risk
ByChris Griggs

As we commence October, it’s crucial to examine the ever-evolving energy landscape from the past month. Our Enverus Intelligence® | Research (EIR) team has diligently dissected key trends and breakthroughs, delivering insightful and data-driven perspectives that empower you to make...

accurate-grid-forecastin
Power and Renewables
ByEnverus

2022 marked a significant milestone for renewable wind generation in North America. New wind capacity reached 14.7GW (gigawatts) from 93 projects, an increase from 2021 of 12GW from 54 projects. Looking to 2024, winds of opportunity show 55GW from a...

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Sign up for our Blog

Register Today

Get Energy Transition Research updates straight to your inbox by filling out the form below.

Sign Up

Power Your Insights

Connect with an Expert

Access Product Tour

Speak to an Expert