1. Summary
Oil Market
- Oil prices were volatile for the last few weeks as doubts continued about OPEC output cuts, OECD crude stocks remained fuller than expected, and stocks in the United States remained in the upper-limit average. The Brent benchmark oil price started the month at $53.13/b, reached a high of $56.32/b on April 11, and was down to $51.73 as of April 25. April’s average remains $2.12/b higher than March.
- U.S. weekly crude production grew for the 10th straight week, reaching 9.265 mb/d as of April 21, up more than 300 kb/d since January, according to the Energy Information Administration (EIA). U.S. drilling activity continues to grow, up by 10 rigs this week, and up by 426 rigs from the same time last year. 1
- OECD crude stocks fell by 17.2 mb in March, after a sizeable build in January due to a seasonal drop in refinery runs. Together, this implies a total stock increase of 38.5 mb in 1Q2017. OECD product stocks fell from February to March even as most oil product prices fell in March. Middle distillates were the strongest performers in terms of price due to lower output from refiners and higher seasonal demand.
Natural Gas & LNG
- Russia’s Gazprom moved forward last week on Nordstream 2, a massive gas pipeline expansion project, which aims to deliver increased gas supplies to Europe across the Baltic Sea.11 Meanwhile, Russian gas exports to Turkey increased by 25% in April compared to the same time last year, despite the fact that Turkey continues to diversify its energy mix away from natural gas to decrease reliance on foreign suppliers.
- Growing global liquefied natural gas (LNG) trade could support the development of a gas market hub in Asia, according to EIA.
- Regional gas spot prices remained mixed due, in part, to varied temperatures.
Economics
- The U.S. economy is on track for sluggish first quarter growth as consumers and investors are in “wait and see” mode, following events at the national level. Unemployment rate remains low. The Eurozone economy is thriving and received a recent boost by the results of the first round of the French presidential election. The economies of both Japan and China are strengthening due to domestic investments.
Geopolitics & Supply
- OPEC crude output fell by 365 kb/d in March to 31.68 mb/d, according to the International Energy Agency (IEA). Losses in supply from Nigeria and Libya—both exempt from the group’s supply cuts—led the reductions. A joint committee of ministers from OPEC and non-OPEC countries agreed to review extending oil production cuts at the May 25 meeting.
Renewables
- A recent IEA report suggests that economics is not a barrier to some renewable energy for any country. Meanwhile, Fortune 500 companies are increasingly turning to renewable energy and energy efficiency priorities, with nearly half now boasting a climate or clean energy target, according to a recent study from the World Wildlife Fund (WWF).