Baku, Azerbaijan, Oct. 12
By Leman Zeynalova – Trend:
Oil stock draws are likely in the fourth quarter of 2019 despite swift oil output recovery by Saudi Arabia after the mid-September attack on its facilities, Trend reports citing the Oil Market Report of the International Energy Agency (IEA).
“Global oil supply plunged 1.5 million barrels per day (mb/d) in September to 99.3 mb/d after attacks on Saudi oil facilities briefly shut in more than half the kingdom’s production. Even with a swift recovery and steady supply from the rest of OPEC, stock draws are likely in 4Q19,” reads the report.
This is while, according to IEA, a different picture emerges for 2020, when non-OPEC supply growth, led by the US, Brazil and Norway, accelerates from 1.8 mb/d to 2.2 mb/d, reducing the call on OPEC to 29 mb/d.
As for demand, the organization has cut its headline oil demand growth number by 0.1 mb/d for both 2019 and 2020.
“However, the reduction for 2019 mainly reflects a technical adjustment due to new data showing higher US demand in 2018 which has depressed this year’s growth number. This year is seeing two very different halves. In 1H19, global growth was only 0.4 mb/d but in 2H19 it could be as high as 1.6 mb/d with recent data lending support to the outlook: non-OECD demand growth in July and August was 1 mb/d and 1.5 mb/d, respectively, with Chinese demand growing solidly by more than 0.5 mb/d year-on-year,” reads the report.
On September 14, 2019, an attack damaged the Saudi Aramco Abqaiq oil processing facility and the Khurais oil field in eastern Saudi Arabia. The Abqaiq oil processing facility is the world’s largest crude oil processing and stabilization plant with a capacity of 7 million barrels per day (b/d), equivalent to about 7 percent of global crude oil production capacity. On September 16, 2019, the first full day of trading after the attack, Brent and West Texas Intermediate (WTI) crude oil prices experienced the largest single day price increase since August 21, 2008 and June 29, 2012, respectively.
On September 17, Saudi Aramco reported that Abqaiq was producing 2 million b/d and that its entire output capacity was expected to be fully restored by the end of September. Additionally, Saudi Aramco stated that crude oil exports to customers will continue by drawing on existing inventories and offering additional crude oil production from other fields. Tanker loading estimates from third-party data sources indicate that loadings at two Saudi Arabian export facilities were restored to the pre-attack levels.
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