Navarik Market Update

May 18, 2017


OPEC’s well-publicized gamble to extend production cuts and raise prices has so far only stabilized falling crude prices, as smaller US shale output has proven more durable at lower prices than had been anticipated. But as US production continues to rise, OPEC may need to change strategy to avoid simply yielding market share. To that end, they are plowing ahead with a bold play for mid- and down-stream assets to secure off-take of their production rather than let it bunch up in storage and depress the price further.

Saudi Aramco took control of most of Motiva’s US refining and distribution capacity, which it can be naturally expected to continue to strategically supply with Saudi crude rather than American crude. Kuwait, on the other hand, has delayed their joint venture refinery in Vietnam. Whether or not the economics of refining make this strategy viable, and if new projects or acquisitions can be completed in time to have a noticeable effect, is perhaps a more meaningful indicator of oil price trajectory to follow than the simple compliance ratio OPEC holds up. If global crude demand growth continues to slow, particularly in the OECD, getting in that game may be more crucial than ever to prosper in the medium- to long-term.

Further Reading:
OilPrice.com, May 16 2017
Oil & Gas Journal, May 15 2017

 

Figure 1

Figure 2

Source: Joint Oil Data Initiative

 

Figure 3

Source: International Energy Agency

Figure 4

Source: International Energy Agency

 

Colin McCann is an Oil & Gas analyst with Navarik Corporation. The Navarik Data Products team analyzes Navarik's proprietary data sets and external sources to provide insights into the oil & gas shipping market. The resulting analysis enables physical and paper traders to see ship movements across the barrel before anyone else in the market.

To reach a Navarik Oil & Gas analyst email tradeflow@navarik.com. To reach Colin directly call 778-327-6917 or email cmccann@navarik.com.

A list of current available trade flow reports can be found here.

 

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