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The Demand Question

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"... the major obstacle to the development of new supplies is not geology but what happens above ground: international affairs, politics, investment and technology" - Daniel Yergin
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The Demand Question

Matt Sterett
and
Pierre Follea
Dec 15, 2020
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The Demand Question

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“You may not be interested in war, but war is interested in you” - Leon Trotsky


Holiday Schedule: We’re back for a 2nd time this week, on Thursday. After that, we’ll be off until Jan 5th.


OIL DEMAND.

We start off, where we left off - OPEC+ & Oil Demand:

  • Vaccine roll-out timing (?)

  • Increasing lock-downs

  • OPEC+ & restraint (production cuts)

We’ll start off w/ the Good:

  • US products consumption remains (relatively) strong

  • China’s crude oil throughput sets records in November

The Not-So-Good is about the EU / UK:

  • London goes Tier-3 on Wed

  • Starting tonight, France has an 8pm curfew

  • The Dutch go full-lockdown, for 5 weeks

The ironic concern is for Oil is that the Dutch may “succeed” in getting cases down to near-zero.

Obviously, at a *steep* economic cost.

With the indirect consequence that other countries may try the same -


OPEC.

Contradictions abound in Oil Markets:

  • In the last few weeks, commodities have rallied on vaccine headlines

  • At the same time, OPEC cut its demand forecast for 2021

From OPEC’s latest MOMR:

OPEC has steadily pulled back its 2021 demand forecast in recent months.

We highlighted “Europe” in the above chart, bc we think *that* is where the uncertainty (downside oil consumption uncertainty) lies.

OPEC also postponed its technical meetings - which were scheduled to begin tomorrow - to early January.

In light of the changing Covid-policy roll-outs that we discussed above (especially in Europe), the postponements makes sense -


OTHER NEWS.

  • Saudi tankers under fire

  • Jet fuel mounts a comeback

  • All things considered, 2020 has been positive for US LNG


That’s it for today - we’ll be back on Thursday - catch y’all then -

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