Insights
Added Nov 20, 2021

Event highlights: How to exploit uncertainty in rogue oil & gas environments?

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As global market volatility continues to rock America and beyond, Vortexa’s Chief Economist David Wech and Senior Market Analyst Pamela Munger shared their expert insights on Crude and Clean Product supply and demand market dynamics and how to effectively manoeuvre operations to stride ahead of competitors. 

Key topics of discussion include:

  • Repercussions of PEC+ track record on American crude balances
  • Gas-to-oil switching vs Covid-19 recovery vs demand destruction
  • The call on US refining over the winter period

Watch now

 

Core takeaways from the session: 

Crude takeaways

  • Seaborne crude supply is picking up markedly 
  • OPEC+ is finally adding barrels to the market on a net basis, with Saudi Arabia, Russia and the UAE being the key suppliers
  • Barrels are also dragged out of the US with record prices, but this appears to be at an unsustainable (net) rate
  • The demand for crude supplies is set to rise further 
  • Too much of recent supplies (both crude and products) came from storage
  • Seasonal peak demand is yet to come, butCovid-19 can still spoil the party (Europe, China, other Asia)
  • OPEC+ spare capacity is more limited than widely thought
  • High energy and hydrogen costs in parts of Europe and Asia are driving growing global crude flows
  • All this offers multiple opportunities to US up-, mid-and downstream players

Clean product takeaways 

  • Global product cracks and spreads have generally eased in November after an October peak
  • Attractive pricing has added a lot of supply, especially from PADD 3, Russia and the Middle East
  • At the same time, high prices may incentivized players to hold back purchases, while economic and Covid-19 concerns also add to hesitation
  • However, not all supply increases may be persistent, while refining margins look too low now for many players given excessive energy and hydrogen costs
  • Peak winter demand is yet to come
  • US refiners look well-positioned, given cost advantages (gas prices at a fraction of Europe and Asia) and solid demand in nearby Latin American markets
  • Refinery runs may stay close to available capacity throughout the winter season

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