World Commodities Trading
OPEC: oil demand will grow until late 2030s
OPEC expects global oil demand will exceed the pre-pandemic levels in 2022 and grow steadily until the late 2030s, when it will begin to plateau, the cartel said on Thursday, in a major shift in its forecast that put a timeline to peak oil demand.
The coronavirus pandemic has changed some of the key assumptions in forecasts of all organizations and oil majors, including of OPEC, which said in its World Oil Outlook 2020 today that “Going forward, the big question hanging over energy and oil markets is to what extent there will be a longer-term impact on consumer behaviour and thus demand.”
Last month, BP said that we may have already passed peak oil demand, while another major, France’s Total, sees oil demand growing until 2030.
OPEC, for its part, reduced its long-term demand projections from last year’s outlook by more than 1 million barrels per day (bpd), expecting world oil demand to rise from 99.7 million bpd in 2019 to 109.3 million bpd in 2040 and then to slightly drop to 109.1 million bpd in 2045.
“Assuming that the COVID-19 pandemic is largely contained by next year, oil demand is expected to partly recover in 2021 and healthy demand growth rates are foreseen over the medium-term horizon,” OPEC said.
The cartel sees global oil demand returning and exceeding 2019 levels in 2022.
“Nevertheless, future demand will likely remain persistently below past projections due to the lingering effects of the COVID-19-related shutdowns and their impact on the global economy and consumer behaviour,” OPEC said.
Developing economies will continue to support oil demand growth in the medium term, but in the second part of OPEC’s outlook 2019-2045 “demand growth in several key non-OECD countries will decelerate and lead to an extended period of plateauing oil demand.”
OPEC’s rival supply from the U.S. shale is expected to recover quickly when market conditions improve, but U.S. tight oil production is unlikely to reach the heights forecast in previous outlooks, OPEC said. The cartel expects U.S. production will peak in the late 2020s.
Natural gas price forecast – natural gas continue choppy behavior
The natural gas markets have been rather choppy as of late, trading in a range while we wait to see whether or not the hurricane disrupts production. At this point, there should still be plenty of upward pressure though, due to the fact that the demand for natural gas will more likely than not pick up as we head into the end of the year. After all, it is winter in the northern hemisphere, and this of course will have people in Europe and North America buying, using, and consuming more natural gas for heating.
However, the market has gone back and forth over the last couple of sessions, with the 50 day EMA underneath offering a bit of support near the $2.45 level. To the upside, we have seen the $2.70 level offer resistance this week, but I do think that the overall attitude of the market looks to be much more bullish than bearish. Even if we break down below the $2.40 level, I think at this point there is a certain amount of interest at the $2.30 level, followed by the $2.00 level where the 200 day EMA is sitting. This of course is a very bullish indicator that a lot of longer-term traders will play.
National milk production set to increase for first time in three years
National milk production is set to increase this season, as favourable weather, lower input costs and a relatively firm farmgate milk prices support some of the best dairy farming conditions of recent years, according to Dairy Australia’s October Situation and Outlook.
This will be the first annual increase in national milk production in three years — with Tasmania, Gippsland and South Australia leading the charge.
Increased milk supply in most regions is also supporting “cautious optimism” for improved farm profitability.
The report highlights significant changes in consumer purchasing habits resulting from COVID-19.
“Two very different stories are emerging for the current season,” said Dairy Australia senior industry analyst Sofia Omstedt.
“One tells the tale of consistently improving conditions at the farmgate and a positive flow-on impact on milk production. The other reflects depressed global economic growth, disrupted dairy demand and significant shifts in consumer purchasing habits from COVID-19.
US weekly coal production totals 10.3 million st, down 22.9pc on year: EIA
Weekly US coal production was estimated to be over 10.3 million st in the week ended Oct. 3, up 0.9 percent from the previous week, Energy Information Administration data showed Oct. 8.
From the year-ago week, output declined 22.9 percent, and from the five-year average for week 40, at 15.5 million st, production was down 33.3 percent.
Through 40 weeks, US production totaled about 409 million st, down 24.2 percent year on year.
On an annualized basis, US production is projected to be 532 million st, down 24.4 percent from 2019.
While Northern Appalachia and combined Wyoming and Montana production rose week on week, Central Appalachian and Illinois Basin production declined.
NAPP output increased 1.1 percent to about 1.4 million st and Wyoming and Montana output rose 1.5 percent to nearly 4.9 million st. Year on year, NAPP production dropped 25.9 percent and production from the two states fell 21.8 percent.
In the CAPP basin, output was estimated at 1.2 million st, down 1.5 percent week on week and down 23.9 percent from the year-ago week.
IB production declined 1.4 percent to about 1.3 million st. Year on year, output declined 28.1 percent in the IB.
Through the year so far, estimated NAPP output came to 56.9 million st, while Wyoming and Montana production was about 187 million st, CAPP was 48.8 million st and IB was about 52.3 million st.
Annualized, NAPP output is projected to be 74 million st, down 28.5 percent year on year, while Wyoming and Montana is expected to be about 243 million st, down 21.7 percent. CAPP annualized production is estimated at 63.5 million st, down 26.4 percent from 2019 and IB is projected at 68.1 million st, down 31.7 percent year on year.