Oil - A new hope?

No, we think not. While there is plenty of detail to get caught up in, the only real question is whether this week's decision lowers our expectation of OPEC+ production in 2020. The answer is no, not with any certainty (in the case of non-compliant countries) or by a meaningful amount (in the case of Saudi Arabia).

Moreover, given the failure to comply for all of 2019, why should we believe there will be better compliance in January 2020? This is the real problem.

The most constructive signal to come from this week is the improved appearance of OPEC responsiveness. The now-scheduled extraordinary meeting on 5 March provides a good opportunity to forestall undesirable weakness in oil prices, should it occur. This should reduce, but not eliminate, the possibility of Brent prices in the USD 40's/bbl.

We believe downside remains the most likely path of oil prices in the new year, preferring to position through options rather than futures which suffer from negative carry. We affirm 2020 forecasts of Brent 54/bbl and WTI 50/bbl.

OPEC window dressing

The initial reports from OPEC's December meeting were of a 500 kb/d cut. Crucially this was measured relative to the October 2018 baseline rather than current production. The reduction was therefore (rightly) discounted by the market as merely formalising current levels of production (which were already below target).

The last minute twist: Saudi cuts by … -60 kb/d?

During a question and answer session, however, Saudi Arabia then pledged an additional 400 kb/d cut below what it is officially obligated to do. This is a second attempt at delivering a 'Saudi surprise' to reset market expectations. The informal commitment amounts to Saudi production at 9.75 mmb/d (according to our estimate), which is not much below average Jan-Oct 2019 production of 9.81 mmb/d. Therefore the headline cut for Saudi Arabia might be more accurately quoted at -60 kb/d. The largest cuts made to other member quotas are also of similar amounts (50-60 kb/d) which that the signal may well be lost within the noise of typical monthly output variability. The second largest change, of -70 kb/d in Russia, is additionally complicated by the exclusion of condensate, a very light crude often produced in conjunction with natural gas.

Little change to supply expectations

In the end, the only real question is whether this changes our expectation of OPEC+ production in 2020. The answer is no, not by any meaningful amount.

Deutsche Bank

  

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Erdöl/Ölpreis-Thread - Öl, Oil, Brent, Crude V [Alle anzeigen] , Rang: Warren Buffett(1966), 14.5.18 19:44
 
Subject Auszeichnungen Author Message Date ID
Opec-Bericht: Ölschwemme ist passé
14.5.18 19:46
1
OPEC Expects U.S. Shale to Steal Market Share Until Lat...
23.9.18 19:27
2
Rekord bei Ölproduktion
13.10.18 11:19
3
Oil Short-Selling Jumps in Record Streak as Faith in OP...
19.11.18 10:53
4
Katar will im Jänner aus der OPEC aussteigen
03.12.18 09:05
5
RE: Katar will im Jänner aus der OPEC aussteigen
03.12.18 09:18
6
Experten erwarten bei Opec-Treffen erneute Kürzung der ...
04.12.18 08:31
7
Zeichen stehen auf Förderkürzung der OPEC+
05.12.18 19:36
8
USA exportieren erstmals mehr Öl als sie importieren
07.12.18 10:00
9
OPEC einigte sich auf Förderkürzung
07.12.18 17:48
10
Stabilising action from OPEC
10.12.18 08:45
11
OPEC-Öl-Drosselung erst in drei Monaten unterschriftsre...
11.12.18 10:10
12
Russland will Öl-Fördermenge schrittweise drosseln
13.12.18 08:52
13
We expect the post-OPEC $50/bbl (Brent) floor to hold
11.1.19 07:49
14
OPEC Output Falls Most in Almost Two Years as Saudi Cut...
17.1.19 13:26
15
IEA, OPEC and EIA released their monthly oil outlooks
20.1.19 11:56
16
How OPEC Is Helping U.S. Oil Reach a Tipping Point
20.1.19 15:23
17
OPEC and IEA published their monthly reports this week
18.2.19 17:04
18
Deutschland vervierfachte Ölimporte aus den USA
23.2.19 13:34
19
China kurbelt weltweite Nachfrage nach LNG an
25.2.19 09:59
20
Erdgasvorkommen südlich von Zypern entdeckt
28.2.19 20:53
21
Tightening the Venezuela screw
01.3.19 12:33
22
OPEC cuts and then cuts some more
03.3.19 12:17
23
Energieagentur IEA erwartet starken Anstieg der US-Ölex...
11.3.19 16:34
24
Saudiarabien will Ölpreis stützen
11.3.19 20:31
25
Durst der Welt nach Öl bleibt groß
21.3.19 09:23
26
Saudiarabien droht mit dem Ende des Petrodollars
06.4.19 11:55
27
RE: Saudiarabien droht mit dem Ende des Petrodollars
07.4.19 10:59
28
Libyen-Krise treibt Ölpreis auf Fünfmonatshoch
08.4.19 09:20
29
Oil prices should finally break out of the recent tradi...
08.4.19 13:25
30
OPEC discipline to lift crude oil further
09.4.19 12:01
31
Finanzinvestoren werfen den Saudis das Geld nach
11.4.19 09:46
32
RE: Finanzinvestoren werfen den Saudis das Geld nach
11.4.19 10:18
33
      RE: Finanzinvestoren werfen den Saudis das Geld nachgut analysiert
11.4.19 10:35
34
Warum der Ölpreis trotz neuer Krise am Golf ruhig bleib...
16.4.19 09:21
35
RE: Warum der Ölpreis trotz neuer Krise am Golf ruhig b...
23.4.19 22:44
36
USA dürften iranische Erdölexporte komplett stoppen
22.4.19 14:21
37
RE: USA dürften iranische Erdölexporte komplett stoppen
22.4.19 18:28
38
OPEC tritt bei Ölförderung wohl weiter auf die Bremse
12.6.19 10:00
39
Oil Supply to Swamp Demand in 2020 and Squeeze OPEC, IE...
14.6.19 10:56
40
OPEC und "OPEC+" produzieren für höheren Ölpreis
28.6.19 19:52
41
Opec-Deal mit Moskau: Preis statt Marktmacht
30.6.19 19:05
42
US-Förderung führt laut Opec zu Öl-Überproduktion
12.7.19 10:27
43
International agencies published their latest oil marke...
15.7.19 06:31
44
Ölbedarf steigt laut Opec kommendes Jahr weiter
16.8.19 21:58
45
The U.S. Exports More Oil Than Saudi Arabia
12.9.19 11:35
46
IEA warnt Opec vor riesigem Ölüberschuss
12.9.19 21:50
47
Saudis Race to Restore Oil Output After Aramco Attacks
15.9.19 17:06
48
Oil Plunges on Report Saudis May Soon Resume 70% of Los...
17.9.19 17:59
49
A 3-sigma event
23.9.19 12:39
50
Saudische Ölproduktion läuft wieder normal
25.9.19 18:18
51
America’s Great Shale Oil Boom Is Nearly Over
13.10.19 17:53
52
Oil Declines as Russia Throws Cold Water on Deeper OPEC...
29.10.19 08:52
53
Oil may be headed for trouble
04.11.19 08:57
54
OPEC Sees Its Market Share Shrinking for Years as Shale...
05.11.19 10:42
55
Aramco IPO Prospectus Flags Peak Oil Demand Risk in 20 ...
11.11.19 09:47
56
OPEC+ Gambles That U.S. Shale’s Golden Age Is Over
02.12.19 09:43
57
RE: Erdöl/Opec steht vor schwierigen Verhandlungen in W...
05.12.19 13:50
58
Öl-Staaten drosseln Fördermengen deutlich
06.12.19 08:39
59
Oil - A new hope?
09.12.19 10:57
60
Opec revidiert Ölbedarf leicht nach oben
15.1.20 21:01
61
China Oil Demand Said to Have Plunged 20% on Virus Lock...
03.2.20 12:22
62
OPEC senkt Prognose für Ölnachfrage kräftig
13.2.20 06:36
63
Ölpreis auf Talfahrt: Kreml ziert sich bei Forderung na...
14.2.20 15:55
64

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