Deciphering Demand

By: Peter Haralambakis / December 5, 2017

Finally, a major piece of the supply puzzle is in place with OPEC and non-OPEC producers officially extending production cuts through the end of 2018. Now, we must absorb and digest all the potential demand estimate figures being lobbed in from the Saudis and the IEA. With many analysts expecting demand to outpace supply in 2018, we are certainly in for a white-knuckling roller coaster ride. Below is a table showing supply and demand estimates:Supply Demand-1

As of 1:15pm EST, WTI for January delivery is up $0.28 at $57.75, HO is up $0.0257 at $1.9202, and RBOB is up $0.0345 at $1.7267. With OPEC oil output falling 300,000 bpd in November to its lowest levels since May, Goldman Sachs raising its forecast for 2018 Brent and WTI to $62 and $57.50 a barrel, respectively, and estimates for stocks to show a third straight weekly drop of anywhere from 2.5 million barrels to 6.4 million barrels, it is really difficult to see any pullback larger than 5 – 10% in the near term. Below are estimates for DOE stats for week ending December 1st:

                       Reuters            Bloomberg

Crude              -3.5 million      -2.5 million

Gasoline          +1.1 million     +2.5 million

Distillates        +0.5 million     +0.5 million

Cushing             N/A                -2.4 million

For now, we must wait and see if there will be any major turns in the supply picture as we await the APIs tonight and the DOEs tomorrow. As you hang on to this energy sector ride, keep one eye open looking directly at the U.S. output which should play a significant role in the near term and next year. If we get above 10 million bpd, hold on tight.



Categories: Daily Market Update

Peter Haralambakis

Written by

Peter Haralambakis

Peter Haralambakis is a Supply and Trading Business Development Manager at Guttman Energy with over 13 years of experience in commodities trading, analysis, and risk management in products ranging from Corn and Soybeans to Crude Oil Futures and Options to Financial and Physical Biofuels to Natural Gas and Natural Gas Liquids.

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