Oil Pulls Back Ahead Of The Weekend
Oil video 10/9/20.
Saudi Aramco plans to increase its production capacity to 13 million barrels per day
Yesterday we discussed OPEC's 2020 World Oil Outlook, which suggests that demand for oil will continue to rise, reaching 109.1 million barrels per day (bpd) by 2045.
A recent report by Reuters found that Saudi Aramco wanted to increase its oil production capacity from its current 12 million bpd to 13 million bpd.
As Saudi Aramco leads the oil production reduction initiative, which improved the balance between supply and demand at the time of the pandemic, the country is already pondering its position in the post-pandemic world.
Large European oil producers like BP and Royal Dutch Shell are starting to switch to renewable energy. American oil producers like Exxon Mobil and Chevron are focused on their dividends.
As a result of these trends, oil investments are falling. Saudi Arabia expects oil demand to continue to rise through 2045, as outlined in OPEC's most recent outlook.
Within this framework, Saudi Arabia will have the opportunity to increase its market share and get the most out of its oil reserves in the coming decades. Russia is likely to follow a similar strategy.
In the near future the market will pay no heed to these strategic developments. However, the shift in market power from large international oil producers to national oil companies can lead to price spikes in the longer term.
Libyan oil production is one of the key factors for the coming weeks
A combination of a strike in Norway and a hurricane in the US gave oil an opportunity to settle above the $ 41 level. However, both factors are likely to be short-term in nature.
At the same time, there is another catalyst on the supply side that can have a longer-term impact on the market. Libya has increased its oil production to 300,000 bpd and is working hard to reach higher levels of production.
According to a recent Bloomberg report, the Libyan central bank said the country would need to increase oil production to 1.7 million bpd in order to balance Libyan finances. Before the blockade, which lowered oil production to 100,000 bpd, Libya was producing 1.2 million bpd.
Obviously, the country, which continues to suffer from civil war, will find it very difficult to bring its production above pre-blockade levels. However, the trend is clear: Libya will try to increase its oil production in the coming months. If this succeeds, oil supplies can pick up at a time when the world is battling the second wave of the virus, which can put pressure on oil prices.
In our economic calendar you will find all economic events of today.
This article was originally published on FX Empire
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