petroleum and natural gas markets workshop presentation slides · 2 days ago · opec increase july...

Petroleum and Natural Gas Markets Workshop

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EIA Workshop Series:Trends and Expectations Surrounding the Outlook for Energy Markets

www.eia.gov/outlooks/aeo/workshop/energy_markets/

Session 1:

Identifying signposts for rebalanced oil and gas marketsPanelists:

• John Kemp, Reuters

• Kevin Book, Clearview Energy Partners (Managing Director)



Oil market situationSelected indicators

JOHN KEMPREUTERS28 September 2020

What do we mean by “oil market rebalancing”?At least five elements

Closer balance between supply & demand

Normalisation of crude & product stocks

Forward price curve

Sustainable flat price

Sustainable investment

We will put aside for the moment the question of whether the oil market has ever been or will be “in balance”

PRESENTATION TO THE U.S. ENERGY

INFORMATION ADMINISTRATION

KEVIN BOOKMANAGING DIRECTOR

SEPTEMBER 29, 2020

OIL MARKET QUESTIONS

FOR AN “ASTERISKYEAR”

DISCLOSURES

RisksLegislative, regulatory and diplomatic agendas are subject to change.

Analyst CertificationsI hereby certify that the views expressed in this presentation accurately reflect my personal views as of the date of this presentation. I further certify that no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views contained in this presentation.

By: Kevin Book

DisclosuresThe opinions, forecasts, recommendations, projections and interpretations of macro events contained in this report are those of the analysts preparing this report and are based upon information available to them as of the publication date of this report.

The analysts preparing this report based the opinions, forecasts, recommendations, projections and interpretations of macro events contained herein on sources they believe to be accurate and reliable, but completeness and/or accuracy is neither implied nor guaranteed.

The opinions, forecasts, recommendations projections and interpretations of macro events contained herein are subject to change without notice.

The analysts preparing this report are not registered lobbyists and do not advocate or lobby for any particular policy action on behalf of clients.

Although this report may mention specific companies by name and/or specific industries and industry sectors, this report was not prepared, is not intended and should not be interpreted as a research report regarding the equity securities of any company.

(c) 2009-2020 ClearView Energy Partners, LLC.

2 SEPTEMBER 29, 2020

THE ASTERISK: A SYMBOL OF OMISSION OR LIMITING FACTS


Source: ClearView Energy Partners, LLC

*




*Is Demand Different, And For How Long?

• COVID-19 could change the nature of demand:(1) scale; (2) form; (3) timing; and (4) location.

• Examples:

– Electrons at home vs. molecules on the road

– Consumption effects of enhanced unemployment (and the loss of it)

– Going local: U.S. light-duty consumption is ~10% of global liquids




*Key Uncertainties

(1) How governmental, institutional and individual risk perceptions might shape consumption behaviors;

(2) The nature of COVID-19 itself, especially the existence and duration of immunity; and

(3) The inertia and plasticity of economies wracked by stark job losses.

ASTERISK-YEAR DEMAND: LESS AIR TRAVEL


Source: ClearView Energy Partners, LLC, using photo from blog.zoom.us

*An Industry Conference In the 2020s?

ASTERISK-YEAR DEMAND: LESS DAILY COMMUTING


Source: ClearView Energy Partners, LLC, using photo from freepik.com

*The Morning Commute In the 2020s?

https://www.freepik.com/free-photo/laptop-kitchen-counter_1977921.htm

ASTERISK-YEAR DEMAND: LESS PUBLIC TRANSIT FOR THOSE WHO COMMUTE


Source: ClearView Energy Partners, LLC, using photo from vox.com credited to Kevork Djansezian/Getty Images

*Public Transportation In the 2020s?

ASTERISK-YEAR DEMAND: LOWER LABOR INTENSITY AT WORK


Source: ClearView Energy Partners, LLC, using photo from airbus.com

*Factory Workers In the 2020s?

ASTERISK YEAR SUPPLY QUESTION #1: OPEC+ (OR OPEC*) ?


Source: ClearView Energy Partners, LLC, using EIA data (thru September 2020 STEO)

OPEC Increase Apr - Oct 2000

OPEC Cuts Feb 2001 - Jan 2002

OPEC Increases Jan - Jun 2003

OPEC Increase July 2004 - July 2005

OPEC Cut Nov 2006 - Feb 2007

OPEC Cuts Nov 2008 - Jan 2009

OPEC Cut Sept 2016

OPEC Increase June 2018

OPEC Cut Apr 2020

-300

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-100

0

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400

500

Jan-

00

Aug

-00

Mar

-01

Oct

-01

May

-02

Dec

-02

Jul-0

3

Feb-

04

Sep-

04

Apr

-05

Nov

-05

Jun-

06

Jan-

07

Aug

-07

Mar

-08

Oct

-08

May

-09

Dec

-09

Jul-1

0

Feb-

11

Sep-

11

Apr

-12

Nov

-12

Jun-

13

Jan-

14

Aug

-14

Mar

-15

Oct

-15

May

-16

Dec

-16

Jul-1

7

Feb-

18

Sep-

18

Apr

-19

Nov

-19

Jun-

20

OECDInventoriesvs. 5 Year Average(MM bbl)

ASTERISK YEAR SUPPLY QUESTION #2: UPSTREAM CAPEX AND SUPPLY


Source: ClearView Energy Partners, LLC, using BP, EIA and IEA data

0

1

2

3

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7

8

$0

$50

$100

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$300

CY 2

006

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CY 2

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CY 2

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CY 2

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CY 2

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CY 2

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CY 2

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CY 2

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CY 2

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CY 2

020P

MM bbl/d

$ BUPSTREAM CAPEX CLOSELY LINKED (R2 = ~0.72) W/SAME YEAR PRODUCTION

Adjusted Global Oil Investment ($ B) Estimated New Oil Supply (MM bbl/d)

MORE LIKELY A BIRD (OR SUPERMAN) THAN A PLANE


Source: ClearView Energy Partners, LLC, using IATA and IEA data

7.99 7.848.18 8.00

6.89

3.18

4.805.49

6.04 5.896.23 6.05

0

1

2

3

4

5

6

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9

1Q20

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2Q20

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3Q20

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3Q20

20P

4Q20

20P

1Q20

21P

2Q20

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3Q20

21P

4Q20

21P

GlobalJet Fuel/

KeroseneDemand

(MM bbl/d)

LOCKDOWN DEMAND DESTRUCTION VS. INCOME-DRIVEN DEMAND EFFECTS


Source: ClearView Energy Partners, LLC, using BEA, Census Bureau, EIA, FHWA and St. Louis Fed data

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

-40%

-35%

-30%

-25%

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-15%

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GasolineShare

ofPer

CapitaDPI(%)

GasolineProductSupplied

vs.Year-Ago(%)

Gasoline Product Supplied vs. Year-Ago (%) Annualized U.S. Gasoline Spending as a Share of Real, Per Capita DPI (%)

M/M Δ U.S. CASES VS. Y/Y Δ VMT BY STATE: MARCH 2020


Source: ClearView Energy Partners, LLC, using Census Bureau, EIA, FHWA and Johns Hopkins CSSE data

-0.40%

-0.20%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

-10% 0% 10% 20% 30% 40% 50% 60% 70%

MonthlyNew

Casesas

Shareof

StatePopulation,

March2020(%)

Change in State VMT vs. Year-Ago, March 2020 (%)

Bubble Size Corresponds to State Share of CY 2019 U.S. Road Fuels Consumption

M/M Δ U.S. CASES VS. Y/Y Δ VMT BY STATE: APRIL 2020



-0.40%

-0.20%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

-10% 0% 10% 20% 30% 40% 50% 60% 70%

MonthlyNew

Casesas

Shareof

StatePopulation,

April2020(%)

Change in State VMT vs. Year-Ago, April 2020 (%)


M/M Δ U.S. CASES VS. Y/Y Δ VMT BY STATE: MAY 2020



-0.40%

-0.20%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

-10% 0% 10% 20% 30% 40% 50% 60% 70%

MonthlyNew

Casesas

Shareof

StatePopulation,

May2020(%)

Change in State VMT vs. Year-Ago, May 2020 (%)


M/M Δ U.S. CASES VS. Y/Y Δ VMT BY STATE: JUNE 2020



-0.40%

-0.20%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

-10% 0% 10% 20% 30% 40% 50% 60% 70%

MonthlyNew

Casesas

Shareof

StatePopulation,

June2020(%)

Change in State VMT vs. Year-Ago, June 2020 (%)


M/M Δ U.S. CASES VS. Y/Y Δ VMT BY STATE: JULY 2020P



-0.40%

-0.20%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

-10% 0% 10% 20% 30% 40% 50% 60% 70%

MonthlyNew

Casesas

Shareof

StatePopulation,

July2020(%)

Change in State VMT vs. Year-Ago, July 2020 (%)


M/M Δ U.S. CASES VS. Y/Y Δ VMT: ALL U.S. STATES + DC


Source: ClearView Energy Partners, LLC, using Census Bureau, FEC, FHWA and Johns Hopkins CSSE data

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

3/2020 4/2020 5/2020 6/2020 7/2020

MonthlyNew

Casesas

Shareof

Population(%)

VMTDecline

vs.Year-Ago(%)

VMT Decline vs. Year-Ago (%) New Cases as a Share of Population (%)

M/M Δ U.S. CASES VS. Y/Y Δ VMT: 2016 “RED” (TRUMP) STATES



0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

0%

5%

10%

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20%

25%

30%

35%

40%

45%

3/2020 4/2020 5/2020 6/2020 7/2020

MonthlyNew

Casesas

Shareof

Population(%)

VMTDecline

vs.Year-Ago(%)

VMT Decline vs. Year-Ago, R (%) New Cases as a Share of Population, R (%)

M/M Δ U.S. CASES VS. Y/Y Δ VMT: 2016 “BLUE” (CLINTON) STATES



0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

3/2020 4/2020 5/2020 6/2020 7/2020

MonthlyNew

Casesas

Shareof

Population(%)

VMTDecline

vs.Year-Ago(%)

VMT Decline vs. Year-Ago, D (%) New Cases as a Share of Population, D (%)

Session 2:

Supply competition in oil and gas marketsPanelists:

• Mark Finley, Rice University’s Baker Institute (Fellow)

• Sara Vakhshouri, SVB International (Founder)

• Ross Wyeno, S&P Global Platts (Lead Analyst, LNG Analytics)



Global Gas and LNG MarketSeptember 29, 2020

Ross WyenoLead Analyst, Americas LNG AnalyticsS&P Global Platts

Global LNG prices have been down trending since 2018, but the pandemic caused outright prices to invert below the Henry Hub

$0$2$4$6$8

$10$12$14

$/M

MBt

u

Global Gas and LNG Prices

JKM TTF Henry Hub M01 Oil-Indexed**Estimate based on 14.85% Brent Crude Oil

WHO Declares Global Pandemic

US LNG exports became constrained this summer as global prices fell below the variable costs of delivered LNG

3

-$2-$1$0$1$2$3$4$5$6

$/M

MBt

u

US Gulf Coast LNG Netbacks

JKM TTF PSV

PRICE CONSTRAINED

02468

10

Bcf/d

US LNG Feedgas Deliveries

US LNG feedgas deliveries collapsed when netback spreads turned negative

Exports expected to recover this winter, but price risks persist into 2021

LNG Netbacks: Destination market price minus variable costs of supply and transportation

US is expected to become the worlds largest LNG exporter by 2022; North American capacity to breach 16 Bcf/d by 2026

4

0

5

10

15

20

Bcf/d

North American LNG Export Capacity

US Capacity Canada Capacity

Upcoming:

Electric Power Markets Workshop Thursday, October 1, 2020 (1:00 p.m.–2:30 p.m.)

Follow up questions: [email protected]

EIA Workshop Series:Trends and Expectations Surrounding the Outlook for Energy Markets


petroleum and natural gas markets workshop presentation slides · 2 days ago · opec increase july...

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