This is the June 2019 edition of our North America Quarterly (NAQ). This will be the final edition in current quarterly format, as we are moving to a North America Monthly (NAM) with a focus on regional micro balances. We anticipate launching this in Q4 19. We will continue to provide updates on key market developments, such as pipeline additions, producer hedging, and refinery slates via e-mail alerts and our data service available on our website.
Inside this edition:
- In Focus: SPR—Strategic demise: The Strategic Petroleum Reserve (SPR) has insulated the American economy from petroleum price disruption, but as shale production has increased, the US government is pushing to monetise the SPR in the yearly budgets, potentially leaving America vulnerable to low reserves. However, even though the SPR is a key factor in world supply security, the quality of the stocks has been brought into question by the toxic levels of hydrogen sulphide discovered earlier this year in crude sold from the SPR's Bryan Mound site.
- Outlook for crude: 2020 US balances: The key to the balance is exports. We expect total US crude stocks to build by approximately 31.2 mb in 2020 even with US crude exports set to rise by 0.83 mb/d y/y to average 3.82 mb/d. Export growth will be driven by crude production averaging 13.2 mb/d in 2020, higher by 0.96 mb/d y/y. But, the risk to production and hence export growth comes from the substantial increase in light crude production.
- Outlook for production: Producers remain focussed on returns, free cashflow generation and reducing debt, but after Q1 19 earnings, several micro-themes emerged. With new segregations and improved enforcement by midstream firms, NGL and WTL price discovery is set to become an important driver of future financial results for many producers.
NAQ provides a detailed update on: pipeline projects; rail capacity; US PADD-by-PADD crude balances; Canadian regional crude balances; US, Canadian and Mexican regional refinery slates; Canadian crude balances; product demand and cracks; crude imports by grade; shale plays by basin; US independents’ hedging activity in 2019 and 2020; and the latest production data, including rig counts and technological and regulatory developments affecting the domestic oil industry.