Viewpoints 2021: Crude oil

Author Gus Vasquez, Editor

Global crude prices started 2021 averaging above $50/bl, as the Opec+ producer alliance continues to move cautiously and carefully in increasing output. Sellers also continue to find opportunities that may not have been available to them prior to the Covid-19 pandemic.

In the Americas, Alaskan, Canadian and Colombian crudes are now exporting either greater volumes or heading to new destinations as supply continues to chase demand around the globe. In Asia, Chinese buyers remain the preferred outlet for North Sea exporters while a recovery in Libyan volumes could again unbalance a market where demand is expected to remain weak until the second half of the year. The emergence of new pricing mechanisms, most notably a new Murban futures contract in Asia and the launch of a new marker at the US Gulf coast, are also creating some uncertainty around how the pricing of crude in different markets could evolve.

Viewpoints

Alaska’s oil exports persist
Alaskan North Slope (ANS) exports to China could continue as the interim trade deal between Beijing and Washington transitions into the next US presidency and as a recovery in US west coast refining demand remains uncertain. By Benjamin Peyton.

Global politics to shape WAF crude markets
Decisions taken along the Washington-Vienna-Beijing axis will have significant effects on demand for west African crude grades in 2021, barring future escalations of the Covid-19 pandemic. By Nicola De Sanctis.

Nymex crude futures supported into 2021
Nymex light sweet crude futures are likely to remain supported amid bullish expectations of improving global demand. By Gus Vasquez.

CHOPS outage impact on Gulf may linger
A key US Gulf of Mexico offshore pipeline is expected back online in mid-January, but the impact of its nearly five-month shutdown on medium sour crude could linger. By Amanda Smith.

US offshore VLCC terminal race narrows
The race to build US offshore crude export docks that can load very large crude carriers (VLCCs) has narrowed in scope, with some plans merging and others falling by the wayside. By Eunice Bridges.

Hurricane season becomes annual sour squeeze
US hurricane seasons are growing more intense, disrupting and damaging offshore production and transportation infrastructure, a trend expected to provide annual support to US Gulf sour crude prices. By Alex Endress.

AGS Marker grows as potential benchmark
The Argus AGS Marker is poised to emerge as a key benchmark for US crude as Midland-quality WTI liquidity rises at the US Gulf coast, spurred by regional refinery demand as the economy recovers from the strict lockdowns of the early stages of the Covid-19 pandemic. By Amanda Hilow.

Weak demand to limit US crude tanker rebound
US crude tanker rates are expected to experience a limited recovery in 2021 because of a projected sluggish global oil demand rebound in the aftermath of the Covid-19 pandemic. By Michael Connolly.

Global demand to lift Canadian crude-by-rail
Canadian crude-by-rail activity is poised to rebound in 2021 as a tight global heavy sour crude market encourages more volumes to move to the US Gulf coast. By Brett Holmes.

A bleak outlook for VLCC freight rates
Very large crude carrier (VLCC) rates in the Mideast Gulf are likely to remain under pressure into 2021, as Opec+ policies will offer little initial support. By Nikos Kokolinakis.

Libyan recovery key to Med crude complex
The outlook for the Mediterranean crude market next year is heavily dependent on the stability of recently restored Libyan exports. By Felix Todd.

Asia wary over Murban crude futures contract
The big event for Asian crude markets in 2021 will be the launch of Abu Dhabi's Murban futures contract, although if history is any guide, it could be some time before the new contract triggers wider changes in regional crude pricing. By Azlin Ahmad

China beckons again for North Sea exporters
China looks set to be an even more important outlet for North Sea crude next year than it has been in 2020, reflecting both the Asian country's ongoing post-coronavirus economic rebound and the contraction of refining capacity in Europe as the continent continues to battle the Covid-19 pandemic. By Riyan Zerrouki.

Global oil market highlights