Tuesday Oct 20 2020 11:28
2 min
Rystad Energy is taking a bearish view of the offshore segment going forward. It expects that, once investment rebounds, fully half of next year’s forecast oil & gas spending will be on offshore production and storage.
Chinese shipyards are bracing for vessel fabrication requests, Rystad reports. A rise in new orders for floating production, storage, and offloading vessels beginning in 2021 is expected.
What does this mean for oil prices? Banks are split on their predictions.
Goldman Sachs is predicting a 2021 price of $65 per barrel. Morgan Stanley is not so optimistic, with benchmark crude failing to breach $50 p/b.
In the short term, however, OPEC appears to be on the cusp of a crisis.
The IMF has predicted a 4.5% economic contraction for the Middle East and Central Asia this quarter. This is bad news, as these regions are the busiest for hydrocarbons in the world, and home to leading OPEC members.
A GDP contraction would keep oil prices between $40-50 per barrel into 2021.
There is also overproduction. Currently, OPEC output is at 7.7m b/pd. OPEC members will be meeting to discuss production cuts in late October 2020. 5.6m b/pd is the goal.
It is hoped that would stabilise prices, but it’s yet to be established if oil demand will rise again soon.
The natural gas outlook is, as ever, tied in with US weather.
Last week’s natural gas report showed inventories rose by less than expected but prices slid into the weekend as they remain tied to weather forecasts and wavering LNG export demand.
An early-season cold snap is sweeping through the Midwest although, from Monday, demand is to slip as temperatures warm up.
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