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By Julian Lee sure 1/20/2019
Photo: OPEC building.
NEW YORK (Bloomberg Opinion) – The US Energy Information Administration has released its first detailed monthly oil forecast for 2020, which is expected to scare the ministers of OPEC countries: from the fourth quarter, America will export more oil than she has. imports.
This will not make the United States independent of the global supply chain. This does not mean that it will stop shipping crude from the Middle East and Latin America or bringing refined products from Europe and Asia. But this shows that the transformation of the country's oil sector by extracting crude oil from shale is not yet complete. Part of the thanks should go to the OPEC ministers who helped to make this possible.
The transformation is profound and will mean that members of the OPEC + group will likely have to continue limiting their own production much longer than they currently expect if they want to avoid a further rise in global stocks.
By December 2020, the EIA expects the United States to export 1.2 million barrels a day in addition to crude oil and products that they will not import. Ten years earlier, he was buying 9.4 million more than he was selling abroad. This represents a change in net flows of more than a million barrels a day for a decade.
The United States was a net exporter briefly in November, when exports of crude and products surpbaded imports for a week of isolation. This can be repeated intermittently during 2019, but by the end of next year, this will likely become the norm rather than a rarity.
Falling oil prices in 2014 virtually slowed US growth towards this new status, which only resumed in 2017, after the US shale oil sector reduced its costs and that OPEC production cuts have begun to drive prices to a level where their operations have become profitable again.
The surge in US production, driven by oil extraction from shale, has transformed the country's outlook. Two years ago, when the EIA began publishing its detailed forecast for 2018, US production ended the year at 9.44 million bpd. He now sees last month's figures at 11.8 Mb / d.
According to its most recent forecasts, the growth trend is expected to slow down for much of 2019 before recovering in 2020, following the planned start-up of new pipelines to bring oil from the Permian Basin to the Gulf Coast at during the second half of this year. A similar pause in growth was planned for the summer of 2018, but it did not materialize. The EIA has consistently underestimated the US production rate and could do it again.
Increased production in the United States would stimulate foreign sales (both crude and refined products, if this additional oil is processed in domestic refineries). The position of US net exports by the end of 2020 would widen, but the date on which it would become a net seller to the rest of the world would also be advanced.
The United States is already by far the largest consumer of oil in the world, using about one in every five barrels produced worldwide. If the EIA forecasts are accurate, it will soon be one of the biggest net exporters. Outside the group of OPEC countries, only five countries produce more than one million barrels a day: Russia, Canada, Norway, Kazakhstan and Qatar.
This will not, however, make American energy independent. The country will still be a net importer of crude oil to feed its mbadive refining industry. He will still need the high-sulfur heavy oil produced in the Middle East, Canada and the Caribbean to make the most of the refineries his companies have built along the Gulf Coast. And more than ever, it will need foreign markets for the growing volume of surplus products produced by these factories.
For OPEC + countries, growth in US exports will directly compete with their own sales and may require them to further expand their production restriction. Their initial agreement to reduce production in order to rebalance supply and demand was supposed to have done its job for the middle of 2017. It is now expected that it will end in the middle of 2019 and we are already considering to extend it further.
What will OPEC thank for its help? Only the angry tweets of the US President and the threat of prosecution under the legislation proposed by NOPEC.
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