Oil: Inventories set to decline – HSBC

Analysts at HSBC see global oil inventories falling by 0.6mbd in 2017, based on OPEC not rolling over its cuts to 2H17, but in the event that the cuts are extended across 2H17, we would see a ~1mbd fall in global stocks.

Key Quotes

“This would be sufficient to eradicate most of the global stock surplus by end-2017.”

“The period 2018-19 looks like a market roughly in balance. We see growth in global demand being met by a combination of a return of OPEC supply to (and above) pre-cut levels and a strong recovery in US tight oil. However, we expect this period to be characterised by historically low levels of available spare capacity, leaving the market susceptible to unexpected supply disruptions.”

“We expect decline rates and a lack of new project sanctions to have an increasingly obvious negative effect on non-OPEC supply as we move towards the end of this decade. Overall, we see 2020 non-OPEC supply about 1mbd above that of 2016, but with nearly 3mbd of higher US tight oil supply offset by declines elsewhere.”