Let’s get out of our comfort zone and talk about the US Economy for a moment. Now that we have some data, the United States GDP annual growth rate has been confirmed at 2.9%. With that being said, the momentum of that growth slowed at the end of 2018, and has yet to pick up again due to the polar vortex, a general downward trend in consumer sentiment, and other factors. As far as labor is concerned, the unemployment rate fell to 3.8% compared to 4.0% previously. Inflation is ever present, however didn’t hit as hard this last year. In January, total yearly inflation sat at 1.6% y-o-y showing a clear downward trend over the last few months. (compared to 2.2% y-o-y in November)
At the end of 2018 United States crude oil output averaged 11.85mb/d, 1.80 mb/d increase y-o-y. Texas production in December rose by 35 tb/d m-o-m to average 4.88 mb/d with the majority of that coming from the Permian Basin. While New Mexico only averaged 0.82 mb/d, they had the highest y-o-y growth rate from a percentage standpoint, Nearly 46%. North Dakota rose 18 tb/d m-o-m and averaged 1.37 mb/d, with the majority coming from the Bakken shale play.
The Gulf Coast (PADD 3) produced more than 64% of the united states crude oil production, with Texas accounting for 40% of total us crude oil output alone. The Permian Basin accounted for almost 59% of the US crude oil growth in 2018.
Globally speaking, the heavy hitters for growth in 2018 were (in no particular order) Canada, US, Russia, Kazakhstan, and Qatar with Mexico, Norway and Vietnam showing the biggest declines in growth.
Now back to our regularly scheduled programming.
Some new data suggests that the 2019 Global oil output has increased to 1.50 mb/d y-o-y, while Global oil supply has lowered by 0.16 mb/d to an average of 99.15 mb/d in February compared to January. This reduction in supply (gasoline is the main culprit) has led to some bullish sentiment in the market. BRENT crude is a point of attraction for many investors who appear to be strengthening their bullish positions. Whether or not this is a short or long-term strategy is yet to be known for certain, but we can say that the rising price of oil is currently being supported by the expectations of a shrinking global supply in the coming months.
Further support could extend from the global rise in demand, speculated to rise 1.24 mb/d, leading us to an average global oil demand of 99.96 mb/d.
As of March 28th 2019, the current price of BRENT crude is $68.00, and WTI crude is hovering under $60 at $59.51. Ultimately only time will tell where we end up at the end of 2019, but all things considered so far so good!
Stay tuned for our April update!