Fundamentals September 2019

Published at 12:56 25 Sep 2019 by

Fundamentals is our monthly review of global oil data, this is the September 2019 edition.

Crude oil balance:

  • Disruptions to Saudi Arabian and Venezuelan production have cut our OPEC crude estimates, tightening our Q3 19 crude balance by 0.1 mb/d from last month to a 2.2 mb/d draw.
  • Despite upward revisions to production from the UAE and Russia, lower Saudi and Venezuelan production has seen the Q4 19 crude draw steepen by 0.4 mb/d to 1.1 mb/d.
  • Our full-year 2019 balance now shows a 0.8 mb/d draw, heavily weighted towards H2 19, while our 2020 balance shows inventories drawing by 0.1 mb/d.


Liquids balance:

  • Our Q3 19 outlook shows a 2.4 mb/d draw, deeper by 0.7 mb/d than our forecast last month, due to lower OPEC crude production.
  • Our Q4 19 liquids balance has moved to a 0.7 mb/d draw, from our forecast last month of flat y/y, on curtailed Venezuelan and Saudi Arabian production.
  • For 2019, our liquids balance now shows average draws of 0.7 mb/d, while in 2020, we now expect a significant 0.8 mb/d build, assuming OPEC+ barrels return from April 2020.


Price forecasts:

  • Recessionary fears are stymieing flat price and despite a spike in the geopolitical risk premium, we have lowered our Q3 19 Brent forecast by $5.50 to $63.50 per barrel and WTI by $3.90 to $58.10 per barrel.
  • We have lowered all our crude price forecasts for Q4 19 and 2020, with Brent reduced by $7.00 for both Q4 19 and 2020, to $66.00 per barrel and $67.80 per barrel respectively.
  • Our WTI-Brent spread for Q4 19 is $5.40 per barrel, flat on our Q3 19 forecast, though our Brent-Dubai outlook is in $0.20 to $3.70.



  • August global demand rebounds sharply to 1.8 mb/d y/y growth, with strong preliminary US readings.
  • July demand came in 0.72 mb/d lower than preliminary estimates led by downward revisions to OECD demand as European demand disappointed.
  • June demand was revised lower by 0.16 mb/d, led by non-OECD Asian demand. Demand was higher y/y by 0.78 mb/d.
  • Global demand still on track to rise by 0.9 mb/d in 2019 and by 1.2 mb/d in 2020.



  • Non-OPEC liquids (crude, biofuels and processing gains) production in August was pegged at 64.9 mb/d, higher y/y by 1.5 mb/d and up m/m by 0.3 mb/d.
  • US liquids output registered a sharp 0.5 mb/d m/m recovery in August, higher y/y by 1.6 mb/d to 18.7 mb/d. GoM output recovered by 0.4 mb/d m/m as volumes returned following the outage caused by Hurricane Barry in July.
  • Since last month, our 2019 supply forecast has been raised marginally (by less than 0.1 mb/d), while our 2020 forecast is broadly unchanged at 66.2 mb/d.
  • OPEC produced 29.73 mb/d in August, higher m/m but lower y/y by 2.60 mb/d.
  • Nigeria led the increase, offsetting further declines in Iranian output.
  • Following attacks on Saudi infrastructure and further shut-in of Venezuelan production, we have lowered our OPEC production estimates for Q3 19 and Q4 19 by 0.53 mb/d and 0.56 mb/d respectively. We have lowered our 2020 crude forecasts by an average of 0.17 mb/d, led by the downgrade to Venezuelan production.



  • Our August balance shows a 2.7 mb/d draw for crude and a 2.9 mb/d draw for liquids. Preliminary data from the IEA show a total liquids stockdraw of 17 mb in the OECD.
  • We estimate non-OECD crude stocks drew by 11.3 mb in August, driven by China, where stocks fell by more than 12.8 mb, more than offsetting builds in the Middle East.
  • September global crude draws will be larger than expected following the attack on Saudi Arabian oil infrastructure and Aramco drawing on storage to supply customers.
  • July revisions to IEA data show a total liquids stockbuild of 1.5 mb, with crude oil stocks drawing by 37 mb versus a 38 mb build in product stocks.


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