WORLD OIL MARKET FORECAST

January 24, 2020

Market has priced in much of anticipated seasonal weakness. Watching for risks from China,
but 2Q set for stronger crude prices
DEMAND
Global economic growth keeps improving, but the coronavirus has the potential to significantly disrupt the 2020 outlook for both the
economy and oil demand
 We revised 2019 growth down for second month in a row to 0.85 MMB/D (from 0.90 MMB/D last month), on weak latest actuals in most
regions. Warm temperatures in Northern Hemisphere did not help demand in December either. January appears to be historically warm,
with potential 830 MB/D shortfall in heating oil demand vs. 2019.
 We kept 2020 growth at 1.33 MMB/D for now (from 1.34 MMB/D last month) but put it under negative watch due to the fast-spreading
coronavirus. We assessed the virus impact on demand at 50-70 MB/D in China’s Hubei province alone due to local transport lockdown,
and up to 150 MB/D in global aviation reduction for next two months.
SUPPLY
Significant increase in outages and risk, but revisions to supply upwards
 Global oil supply growth forecasts revised higher. 2019 now seen contracting by 0.1 MMB/D (from -0.3 MMB/D prior), then growing by 1.8
MMB/D in 2020 (from 1.5 MMB/D prior). 2021 supply growth forecast at 1.5 MMB/D.
 Major outages in Libya and other disruptions in Iraq, Nigeria. Geopolitical risks certainly higher on heightened Iran-US tensions. But
supplies out of UAE have been significantly higher (although should be reined in soon), new projects are supporting record production
out of Brazil and Norway, and Neutral Zone return is likely to start in coming months.
DOWNSTREAM
IMO 2020 is here with disruptive changes to operations and markets but no major incidents or reported cheating so far
 Global refinery downtime will stay around the highs of last year through April, but is expected to decrease significantly in May and June.
Meanwhile, unplanned downtime in France due to strikes has unseasonably increased Western European refinery outage levels in
January; yet, we expect the situation to gradually normalize in February and March.
 HSFO prices collapsed and diesel-HSFO spreads increased to $50, their widest since 2008, before easing partially back.
 Diesel cracks have underperformed, weighed down by weaker onshore and MGO demand, but still have some upside.
 Refinery margins have diverged with sweet simpler refineries producing VLSFO seeing very strong margins, while sour cracking
refineries in Asia are struggling in negative territory. Some runs trimming is likely there.
 Sweet-sour crude differentials have widened but high freight rates mask some inter-regional spread effects.
 IMO 2020 transitions will continue with different factors peaking at different times before easing more broadly late this year.
INVENTORY
Markets feeling comfortably supplied
 Commercial stock draws in the three major OECD markets (US, OECD Europe, Japan) have disappointed, mostly on strong US product
builds. Preliminary data through Dec points to a 210 MB/D draw for these regions, vs a 600 MB/D draw forecast in last month’s outlook.
 Weaker than anticipated global refinery crude runs are limiting crude stock draws. 1Q20 global crude runs are set to come down by 820
MB/D on the quarter, which will build crude stocks (700 MB/D) for major OECD regions. But a 1.3 MMB/D pick up in 2Q20 crude runs will
lead to material crude stock draws (200 MB/D) for the quarter for this group.
PRICE
Dated Brent to continue to test $60/Bbl in coming weeks, but 2Q to find strength again
 Brent has been pricing right in line with crude stocks in the three major OECD markets over the past couple of months, reflecting market
confidence in OPEC (output restraint), an improving macro future, and heightened geopolitical risk, but balanced by ample supplies and
a cushion of spare capacity and strategic reserves.
 Ongoing concerns on the coronavirus and visible US weekly crude
stock builds will make it very challenging for oil prices to rise in
CRUDE OIL PRICES, $/BBL WTI Brent
coming weeks. But, Libya remains a key risk to the upside. Brent 75
forecast to average $60/Bbl in February, WTI just below $55/Bbl.
70
 Assuming the situation in China stabilizes and Libya returns, we see
prices rising heading into 2Q, on an increase in global crude runs and 65
crude stock draws in major OECD markets. Brent averages $65/Bbl by 60
June and stays near these levels for most of 2H on more crude stock 55
draws. Brent forecast to avg $64/Bbl for 2020, WTI $59/Bbl.
50
 Brent volatility is in an unlikely lull despite demand gloom and supply
risks. Yet, option markets signal widening bets on Brent prices range, 45
as risks to both a price downside and upside abound in coming Jan19 Jul19 Jan20 Jul20 Jan21 Jul21
months.

globaloilanalytics@spglobal.com
WORLD OIL MARKET FORECAST JANUARY 24, 2020

Global economy in an early recovery phase although manufacturing and

trade are not yet. Coronavirus outbreak could derail the upswing though
Europe has beaten A key message from recent
back a recession macro data releases: the euro
threat, and area, which flirted with a
consumer recession during 2019, is
spending has bouncing back. Data on
picked up steam passenger vehicle sales have
signaled a turnaround: activity
Growth in euro area consumer spending
Car sales, year-on-year % change, Retail sales, year-on-year % change,
3-month moving average 3-month moving average
15% 3.5%
10%
3.0%

contracted sharply in the fall of 5%

2018 (when a switch to more 2.5%

stringent fuel emission 0%

standards created disruptions in 2.0%

vehicles manufacturing supply -5%

chains) and stayed negative on a 1.5%

-10%
year-on-year basis for much of Latest: Dec. 2019 (car sales),
Passenger car sales Retail sales
2019, but then sales turned Nov. 2019 (retail sales)
-15% 1.0%
stronger in the fourth quarter Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19

and achieved a 12.2% gain. Retail

sales (which do not include automobiles) also trended better, recording a 2.4% Y/Y increase in October / November.

A sharp pick up in Declining unemployment, resultant rising income, and improving consumer confidence are apparently boosting
German business spending by European households. Meanwhile, banks loans continued to expand solidly, and rising financial liquidity are
confidence is increasingly facilitating business activity. To be certain, the manufacturing sector is still in the doldrums, as industrial
encouraging production in the euro area declined by 2.3% Y/Y in October / November (which was similar to 3Q’s 2.1% drop). But with
recent improvements in business confidence (the German ZEW expectations index, for example, jumped to 26.7 in
January, after 10.7 in December and a recent low of minus 44.1 in August), a recovery is likely to take hold soon.

Chinese economic Another important message

German business confidence and Chinese industrial production
indicators broadly from recent data: the emerging
improved during Asia region, led by China, is Chinese IP, year-on-year % change,
fourth quarter turning the corner. 4Q data from German ZEW expectations index
3-month moving average
40 7.5%
China were better than
expected. While Y/Y GDP growth 30
7.0%

came in at 6.0%, unchanged 20

6.5%
from 3Q, Y/Y industrial 10
production growth accelerated 0 6.0%
to 5.9% from 3Q’s 5.0%. Other
-10
important coincident indicators 5.5%

(electricity generation, exports, -20

German business confidence 5.0%
and vehicle sales) also recorded -30
China industrial production
directional improvements in 4Q. -40
4.5%

Given a close economic -50

Latest: Jan. 2020 (German confidence), Dec. 2019 (Chinese IP)
4.0%
relationship between Europe Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20

and China (Germany, for

example, is a large exporter of vehicle parts to China), it was not a surprise that key data are moving in tandem in the
two regions.

Pace of U.S. Meanwhile, U.S. data releases remained constructive. Job growth averaged a solid pace of 184,000 per month during
growth remains 4Q, while the unemployment rate stayed at a multi-decade low of 3.5%. Consumer spending growth was somewhat
similar slower than expected and business investment was stagnant, but a jump in residential construction activity was an
offsetting influence. Overall, tracking indicators pointed to 4Q GDP growth of roughly 2%, similar to 3Q’s 2.1%.

But recovery has But the incipient recovery has not broadened to all segments of the world economy. As discussions of industrial
been uneven, with production point out below, the manufacturing sector’s slump is persisting in many countries. World trade volume was
manufacturing slightly below a year-ago level in late 2019. Some key emerging economies, including India, Mexico, Chile, and South
sector still Africa, are still reporting weaker growth data. Further, heightened political risks in the Middle East have the potential to
struggling

© 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved. 3
WORLD OIL MARKET FORECAST
In 2021, global
demand growth
goes back close to
trend, after three
years well below
trend
© 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved.
JANUARY 24, 2020
(1.04 MMB/D), a beneficiary of IMO spec change, although we revised downward our forecast for the consumption of
marine gasoil significantly. Moreover, we still expect residual fuel oil demand to fall 0.35 MMB/D.
For 2021, we forecast global oil demand to grow by 1.46 MMB/D or 1.4%, as GDP growth is expected to pick up to 3.3%.
This demand growth is slightly lower than the long term trend but healthy nevertheless. Looking at product profile for
2021, we see demand for gasoil/diesel to get back to its normal growth pattern of ~400 MB/D. Similarly, residual fuel oil
growth is expected to turn positive as the impact of IMO impact spec changes stabilizes.
6
WORLD OIL MARKET FORECAST JANUARY 24, 2020

Markets feeling comfortably supplied

Commercial 2020 now looks more balanced, with commercial stocks for the major OECD markets forecast to build by a slight 40
stocks are not MB/D, compared to draw of 80 MB/D forecast in last month’s outlook. We still see demand improving in 2020, but a
drawing by as strong recovery in supply growth and confidence in spare capacity (given OPEC cuts), stocks (satellite and ship tracking
much as we data point to a steady increase in non-OECD crude stocks in the past six weeks), and strategic reserves are leaving oil
expected markets feeling comfortably supplied. Even the Saudi Arabian oil minister recently made comments on the potential for
an extension of cuts come March, which we currently expect will occur assuming the Libyan outage lasts just one month.

2021 balances

1Q is a seasonally weak period, but watch for bigger crude stock draws in 2Q
Product stock builds have been very strong. But crude stock draws in the three major OECD markets have also fallen
short of expectations for December (drew by 475 MB/D, compared to the 550 MB/D draw forecast in last month’s
outlook), mostly on weaker than expected global crude runs (runs increased by 860 MB/D in December, compared to 1
MMB/D forecast prior). 1Q global crude run forecasts have also been reduced (down 820 MB/D on the quarter, compared
to down 500 MB/D in last month’s report). 1Q20 crude runs are now seen down 300 Y/Y.
For 2Q, a 1.3
MMB/D increase in Yet we continue to see refinery
activity improve in 2Q20. We see Crude stock builds seen for 1Q, but material draws expected for
global crude runs 2Q20.
supports crude global crude runs up 1.3 MMB/D
stock draws of on the quarter (+2.2 MMB/D on Global crude runs 2017-2020 Three major OECD commercial crude oil stock changes
200 MB/D for 3 the year) for 2Q, supported by 87 1,500

major OECD the start and ramp up of nearly 2

markets MMBD of refinery capacity in 85 1,000

2020. This will increase demand 83 500

for crude and drive material
MB/D
MMB/D

crude stocks draws for the 81 0

quarter. Crude stocks in the

-500
three major OECD markets are
79

forecast to build by about 700 77 -1,000

MB/D in 1Q20 (570 MB/D forecast

prior), then draw by 200 MB/D in 75 -1,500
Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20
Jan-17 Jan-18 Jan-19 Jan-20
2Q (460 MB/D forecast prior).

© 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved. 8
WORLD OIL MARKET FORECAST JANUARY 24, 2020

Brent volatility currently in an unlikely lull despite demand gloom and supply
risks. Yet, option markets signal widening bets on Brent prices range, as
risks to both the downside and upside increase in coming months
Implied volatility Brent Asian options’ implied Brent Asian Option IV
has remained volatility averaged 28% over the
subdued in past last month. It spiked at 31.29% 70
few days, implying on January 13, dropped back to
the selling 25.41% afterwards, and has now 60

pressure on Brent rebounded to 28.12%. The

is not that virulent implied volatility recently 50

Volatility in %
jumped back up over concerns 40
of the coronavirus outbreak in
China. The implied volatility, 30
however, remains somewhat
subdued relative to the 20

magnitude of the price

downtrend, implying that the 10

selling pressure might not be

that “virulent” after all. This
indicates that, despite the fact
Brent prices might recover and move slightly up in the short term, the volatility still has room to increase over the coming
weeks as oversupply worries and sluggish demand growth weighs on global crude oil prices.

The stochastic volatility peaked

Dated Brent: Simple vs TGARCH Volatilities
at 31.57% on January 16,
dropped back to the 29% - 30% 75 33
interval immediately after and 31
fluctuated sideways since then. 70 29
Specifically, the TGARCH 27
volatility has been increasing

Volatility in %
65
Price in $/b

25
throughout the whole month of
23
January and spiked to 31.5% 60
21
because of Libya’s surprise
19
reduction in crude exports. 55
17
Nevertheless, the stochastic
volatility has never dropped 50 15

back since it reached this level

indicating the market is likely to
Dated Brent Simple Volatility TGARCH Volatility
experience an even more
volatile trading environment in
the coming weeks. However, it is worth noting that the actual sideways movement of volatility implies that the actual
selling pressure is far from violent.

© 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved. 10
WORLD OIL MARKET FORECAST JANUARY 24, 2020

Refinery margins These changes in product

Refinery margins diverge on sweet vs sour, particularly in Asia
diverged with values, particularly sweet vs.
sweet simple sour, have led to tremendous Asian Refinery Margins

capacity changes in the value of crudes 16

outperforming by refiners. Heavy sweet crudes 14

Bonny Light_Singapore_VISB/FCC/HCU

sweet conversion which produce VLSFO directly 12

Heavy sweet topping Cabinda_Singapore_FCC/HCU/Coking

and sour coking, from distillation are extremely 10 Cabinda_Singapore_Topping

and all valuable. Some have been sold 8 Cabinda_Singapore_VISB/FCC/HCU

outperforming at never before seen premiums 6 Dubai_Singapore_VISB/FCC/HCU

HSFO-producing to benchmark grades. For 4 Hvy Sweet cracking Duri_Singapore_Topping
simple/medium example, Australian heavy- 2 Lt Sweet Cracking
conversion sour ESPO_Singapore_VISB/FCC/HCU

sweet Pyrenees (19 API/0.2% S) 0 Sour Coking

runs WTI MEH_Singapore_VISB/FCC/HCU

recently sold at Platts Dated -2 Sour cracking Dubai_Singapore_FCC/HCU/Coking

Brent + $31/Bbl; Van Gogh (17 -4
Arab Light to Asia_Singapore_VISB/FCC/HCU
API/0.3% S) sold at Dated Brent -6
Sep-19 Oct-19 Nov-19 Dec-19 Jan-20
+ $18/Bbl. That makes these the
most expensive crude grades in
the world at present!

More modest gains are seen in light-sweet crudes versus medium-sours. For example, the Ekofisk-Urals spread
increased from $2/Bbl in early November to $6-8/Bbl (FOB) over the last 4-6 weeks. With softer Urals prices relative to
competing delivered grades, Urals margins in Europe have corrected from very weak back up to more normal levels.

Nevertheless, many medium and heavy sours have not eased all that much. Refinery margins for sour crudes in
conversion are generally lagging sweet crudes in conversion/simpler capacity, particularly in Asia. The reasons for that
lag have to do with lower supply of sour crude globally (e.g., sanctions on Venezuela and Iran, and OPEC cuts) but also
due to timing impacts that have not yet equilibrated.

USGC imports of For USGC crudes, weaker HSFO prices do not directly affect US crude differentials that much as US cokers still have
sour feedstocks room to process locally produced resids. US diffs will weaken as cheaper imported sour barrels become offered into the
have already US and drive local sour prices lower (e.g., widen Mars - WTI diffs). Right now, US customs data are showing a rapid
significantly increase in the imports of sour resid (up 300 MBD yoy in Dec, up 400 MBD yoy so far in January). Urals crude prices are
increased now low enough to be more competitive into the US. But the movement of sufficient sour into the US to meaningfully
change the balances and price differentials will take a bit longer. The irony here is that the strength of VLSFO has already
pulled sweet resids out of USG cokers leaving more room to backfill with sour local/imports and that had the unexpected
effect of boosting Mars differentials initially. That is likely to persist until enough sour arrives in the USG to fully backfill.
The timing for that is a hard call to make right now, but we are assuming some impact to occur over the next two months
(for more details, see USGC Imports of HSSR spotlight report).

Looking to Brent-Dubai, the story is also complex. With current prices, refinery margins in Asia for sour crudes are very
poor – negative levels. That cannot last forever, but it can persist for an uncomfortably long time. Sweet-sour diffs in
Asia need to widen for refiners to maintain full runs. But the rebalancing steps are harder/slower for Asia as the region
does not have sufficient local alternatives to purchase instead of Mideast sour. And there is an inertia element to it in
that many Asian refiners set Mideast volumes as their base and essentially pay whatever it takes to get them. They need
to purchase more Atlantic Basin sweet to change the balance.

© 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved. 16
WORLD OIL MARKET FORECAST JANUARY 24, 2020

But two are still holding up quite well:

 The pull on distillate into VLSFO blends is likely on track as shown by low viscosity for most of the VLSFO
sales reported to date.
 Distillate stocks started out relatively tight (e.g., in October) and have not increased much so far, remaining
generally below average.
Looking through various scenarios, most provide some upside for distillate cracks but few provide a sufficiently bullish
catalyst needed to spike the market – at least not starting from where we are now in the 3rd week of January. It was a
very different proposition 1-2 months ago, but winter is ending. Once gasoline season hits, then margins strengthen and
runs will likely increase, especially with new refinery capacity ramping up.

Consequently, we have revised our outlook for distillate cracks to be healthy, strong for the season in 1Q/2Q, but not
extraordinary.

Gasoline season For gasoline, the situation is also Gasoline cracks pressured by high current inventories but
outlook looks mixed. Not-as-firm distillate supported by strong VLSFO (pulls on FCC feeds) and firm for the
better than last cracks have left the diesel- season middle distillate
year, but no gasoline spread closer to $/Bbl USGC Unl 87 vs LLS $/Bbl
NY RBOB vs Brent Forward Curves

standout favoring gasoline than last year 40

20

(and versus earlier 35

15
expectations). Refiners are 30

responding with higher gasoline 25

10
yields. Typically for the US, a 20

change in the price spread of 15

5
$5/Bbl shifts yields by 0.5% in 10

the winter time. Stocks in the US 5 0

are currently high. Chinese 0

exports are increasing. -5 -5

Consequently, we have Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-19 May-19
M1
Sep-19 Jan-20
Mar-19
May-20
Aug-19
Sep-20
Oct-19
modestly trimmed back the
Five year range Five year avg. 2019 2020
Oct-19 Nov-19 Jan-20

outlook for gasoline cracks.

Nevertheless, IMO 2020 is shifting yields from where they otherwise would have been (e.g., pulling FCC feeds such as
LS SRR into VLSFO). That light-loads FCC units and cuts gasoline production.

We expect an “average” gasoline season in 2Q 2020. That is considerably better than last year, but not extraordinary.
Later in the year, gasoline cracks are more likely to be under pressure as there is substantial refinery capacity coming
on stream globally which will ultimately broadly push back on light products.

HSFO cracks will For HSFO, cracks dipped deeper

slowly increase
over 2020 as more
ships add
than our outlook but then
recovered and are now close to
expectations. They are likely to
HSFO cracks collapsed then partly recovered but will only slowly
recover from here over 2020. Forward curve nearly flat now.
$/Bbl
Prompt Singapore HSFO vs Dubai $/Bbl
Singapore HSFO vs Dubai Forward Curves

scrubbers slowly increase over the year as 20

10

ships add more scrubbers. 15 5

10
0
5
0 -5
-5
-10
-10
-15 -15

-20
-20
-25
-30 -25

-35
-30
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Jan-19 May-19 Sep-19 Jan-20 May-20 Sep-20
Five year range Five year avg. 2019
2020 2020 forecast M1 Mar-19 Oct-19 Nov-19 Jan-20

© 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved. 18
WORLD OIL MARKET FORECAST
Venezuelan crude
production fell
from 950 MB/D in
December to 810
MB/D in January
Russia’s energy
and finance
ministers retained
their posts,
indicating a
continuation of oil
policy
Changes to Platts Analytics’ World Oil Balances
Please note,
Ecuador now
removed from all
OPEC figures
shown
© 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved.
JANUARY 24, 2020
January: 100 MB/D below last month’s outlook, and down 150 MB/D since November. We forecast a rebound to 3.4
MMB/D in February and March, and 3.5 MMB/D in 2H20. However, political paralysis risks setting back crucial export
infrastructure upgrades.
Venezuelan crude supply fell to 810 MB/D in January, as technical issues appear to be taking a toll. Volumes had
rebounded to 925 MB/D in November/December, from 600 MB/D in September, on apparent sanctions workarounds
including transponder shutdowns, ship-to-ship transfers, crude for product swaps, and other non-U.S. dollar
transactions. But given deteriorating infrastructure and lack of new investment, a decline looks inevitable. We forecast
production to fall to 650 MB/D by end-2020, same as last month’s outlook. In addition, with no movement toward regime
change, and the 2020 U.S. election approaching, political pressure to ramp up sanctions will rise.
Russian President Putin’s government shakeup is creating political intrigue, and appears to create a path for him to
retain de facto control after his final term ends in 2024. If anything, the move will likely postpone the risk of an unstable
transition and power struggle. In the meantime, the crucial posts of energy and finance ministers remain unchanged,
indicating a continuation of the status quo. Policy decisions will eventually become more difficult, as the largest
headwind to medium-term supply growth is the collision of interests between fiscal requirements and incentivizing new
production. In any case, Putin will likely remain the main arbiter of OPEC+ cuts. He must weigh the economic and
geopolitical benefits of cooperation with Saudi Arabia, versus the desire of some domestic producers to unfetter supply
with Brent above $60/Bbl.
Our OPEC forecast underwent
an upward revision of 170 MB/D Saudi Arabia will continue to produce well below its quota
for 2020, despite the production Saudi Crude Production* (MMB/D) Russian Crude and Condensate Production** (MMB/D)
cut announcement in early 12.0 12.0
December (see supply change 11.5 11.5
section later). Kuwait and Saudi 11.0
11.0
Arabia are now set to resume
Neutral Zone output in the 10.5 10.5
coming months, earlier than our 10.0 10.0
previous forecast for a 2021 9.5 9.5
restart. We now forecast 50
9.0
MB/D in 2Q20, rising to 250 MB/D 9.0
by 4Q20, and 500 MB/D by 2H21.
In addition, UAE loadings data
*Platts Analytics ca culation of supply-to-market ** Using Platts Analyt cs conversion ratios from metric tons
excludes Saudi share of Neutral Zone
*** 1Q20 pledge adds exempted condensate volumes to crude quota
points to far higher exports than Saudi Crude Production* Russian Crude and Condensate Production**
previously assumed, resulting in Saudi Forecast
Official Saudi OPEC+ Quota
Russian Forecast
Russian OPEC+ Pledge***
an upward forecast revision of
180 MB/D in both 2019 and 2020. On the other hand, the Saudi oil minister reminded the Davos forum this week of the
“potential to continue [the OPEC+] agreement” beyond March. In any case, as long as Saudi Arabia can continue to pump
well above 9.5 MMB/D, while preserving Brent prices above $60/Bbl, it will be unlikely to shift its focus away from
balancing short-term markets. We forecast 9.75 MMB/D in 1H20, and 9.8 MMB/D in 2H20.
Summary
Revisions to the world oil fundamentals over the past month for 2019 saw a 10 MB/D increase to global demand and total
supply increased by 170 MB/D (OPEC crude was revised higher by 160 MB/D, and non-OPEC by 10 MB/D). For 2020,
demand was left unchanged while supply was increased by nearly 400 MB/D (OPEC crude revised higher by 170 MB/D
while non-OPEC higher by 230 MB/D).
Demand growth is 850 MB/D in 2019 and increases to 1.33 MMB/D in 2020. (This compares to growth of 900 MB/D and
1.34 MMB/D in last month’s report.) Total supply contracts by 0.10 MMB/D in 2019 but grows by 1.76 MMB/D in 2020. (This
compares to a contraction of 260 MB/D and growth of 1.54 MMB/D in last month’s report.) OPEC supply contracts by 1.9
MMB/D in 2019 and another 400 MB/D in 2020. Non-OPEC supply grows by 1.83 MMB/D in 2019, 2.16 MMB/D in 2020.
We introduce 2021 forecasts in this report. We see demand growing by 1.46 MMB/D and supply growing by 1.47 MMB/D
next year (OPEC grows by 0.3 MMB/D and non-OPEC by 1.14 MMB/D).
21
WORLD OIL MARKET FORECAST
US 2019 demand
growth depended
on LPG & ethane
Distillate demand
under pressure
due to warm
temperatures, low
Ags activity, trade
issues and low
manufacturing
© 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved.
JANUARY 24, 2020
*Please note, Ecuador has been excluded from OPEC figures throughout this report, for all years shown. OPEC crude
figures are based on a current membership basis for all years, which includes Algeria, Angola, Congo, Equatorial Guinea,
Gabon, Iran, Iraq, Kuwait, Libya, Neutral Zone, Nigeria, Saudi Arabia, UAE, and Venezuela, and excludes Ecuador,
Indonesia, and Qatar.
Revisions and growth rates are summarized in Table 3 and explained in more detail below.
TABLE 3: WORLD SUPPLY/DEMAND
REVISIONS VS LAST MONTH ANNUAL GROWTH
MMB/D 2019 2020 2021 2019 2020 2021
WORLD OIL DEMAND 0.01 0.00 NA 0.85 1.33
NON-OPEC* 0.01 0.23 NA 1.83 2.16
OPEC CRUDE** 0.16 0.17 NA (1.93) (0.40)
* Includes OPEC NGL/Condensate
** Gabon, Equatorial Guinea, Congo included and Indonesia, Qatar, and Ecuador excluded from OPEC for all years shown.
Demand
USA
Platts Analytics has left unchanged vs. last month its estimate of U.S. GDP growth at 2.31% in 2019 while raising GDP
growth in 2020 by .03%pts to 1.87%. We expect growth to decelerate to 1.78% in 2021.
We are calling for Disposable Personal Income (DPI) growth in 2019 to average 3.0% up from 2.93% in December. DPI
growth decelerates to 1.5%, from 1.29% in 2020 previously, then increases to 1.6% in 2021. Our forecast calls for Industrial
Production (IP) to grow .8% in 2019, increasing to .9% in 2020 and to 1.7% in 2021.
U.S. HDDs, which were 1.7% above normal in 2019Q4, are estimated to be 15% warmer than normal in January, which
should lose 272 MB/D of distillate demand.
The major engine of oil demand growth in our forecast continues to be LPG/Ethane. After growing 100 MB/D last year,
growth increases to roughly 200 MB/D per year through 2021. This forecast is unchanged vs our last forecast. Apart from
this product group, oil demand continues to languish as GDP growth falls short of the roughly 2% threshold growth rate
that will permit oil demand growth in the traditional product categories, which have been associated with demand
growth in the past. This weakness is illustrated by recently released demand data. Preliminary final EIA estimates for
October demand are now available as well as weekly demand data through mid-January. These data led to a 290 MB/D
downward revision to October. We over-predicted most of the products with the largest errors in Kerojet demand (-102
MB/D), LPG (-129 MB/D), and PetCoke (- 82 MB/D). By comparison, our forecast fell 111 MB/D and 63 MB/D short of reported
October demand for Unfinished Oils and Asphalt and Road Oils, respectively. Weekly demand data since October reveal
weakness across most of the demand barrel. This results in a 230 MB/D downward re-assessment to fourth-quarter
total oil demand vs. our December outlook. The largest markdowns were to Distillate (-160 MB/D), Kero (-40 MB/D) and
“Other” products (-50 MB/D). Liquids (LPG/Ethane), by contrast, increased by 50 MB/D. This weakness appears to have
bled into January resulting in a 190 MB/D markdown to demand for 2020Q1.
Unanticipated weakness in distillate was the primary reason for the markdowns to total oil. As noted, the weather has
been warm, and activity in the manufacturing sector recently reached recession levels. Equally important, container
traffic into West Coast ports has been falling precipitously in recent months. It is unclear to what extend this decline
container imports reflects the U.S. - China trade war and/or the diversion of container traffic to East Coast ports via the
now enlarged Panama Canal. In both instances, truck miles traveled is reduced, with resulting declines in truck diesel
demand. As the China-U.S. trade war gets resolved, some of this lost demand will return. Phase one of the U.S.-China
trade deal is expected to restore 30 MB/D out of an estimated 90 MB/D lost diesel demand due to the trade war. This
return along with increased gasoil marine bunker demand, is expected to add 80 MB/D to distillate demand this year
and another 50 MB/D in 2021. Farm demand should be yet another source for demand growth if normal weather
conditions are realized. Adverse weather conditions have twice delayed field maintenance and left some crops
unharvested this fall. Despite this positive growth, distillate demand in 2020 is down 40 MB/D vs. last month, largely
because of the weakness in 2020Q1.
22
WORLD OIL MARKET FORECAST JANUARY 24, 2020

By contrast, gasoline demand growth has been negative for most of this year despite consumer-favorable gasoline
prices and a strong labor market. It has been suggested that gasoline demand is undergoing secular weakness due to
changing demographics and tastes as well as inroads by electric vehicles. We have annual gasoline demand falling 20
MB/D this year and 70 MB/D in 2021.

Gasoline demand
growth weak due
to demographics
and changes in
consumer tastes
Kerojet demand growth, which averaged 20 MB/D in 2019, is expected to continue to add 20 MB/D per year over the next
two years. Resid demand in the U.S., which is largely bunker demand at this point, is estimated to have declined by 30
MB/D in 2019. Our forecast calls for resid to recover 20 MB/D of this lost demand this year and then in 2021.
This growth profile is essentially unchanged from last month’s forecast. “Other” products, which grew 20 MB/D in 2019,
are expected to give back 100 MB/D this year given the weakness in the industrial sector and then MB/D in
2021 as

Europe
Although GDP growth in Western Europe strengthened towards the end of 2019, the outlook for economic growth in
2020 and 2021 now appears weaker than we had forecast last month. We are raising GDP growth estimates in Europe
by .05% in 2019 while lowering our growth assumption in 2020 by .03%. GDP growth is now forecast to average 1.11% in
2019 and 1.31% in 2020 and 1.51% in 2021. Evidence for a gradual improvement in GDP growth is apparent in the
improvement in consumer sentiment to the highest level in five years. This improvement comes despite recent
demonstrations in France and the expected negative impact on GDP growth from both phase 1 of the U.S.-China trade
agreement and Britain’s exit from the EU.

Northern Europe saw HDDs fall 7.3% below normal in 2019Q4, while weather in Mediterranean Europe was 17.2% below
normal. We expect Western Europe to experience warmer-than-normal temperatures (14%) in January, which should
result in a 283 MB/D decline in oil-heat demand versus normal.

Downward We are now in receipt of IEA data for October and selected country data through November. The latest data include a
revisions to roughly 20 MB/D upward revision to both 2018 oil demand and January through September oil demand. These revisions
4Q2019 strengthened gasoline demand by 20 MB/D in 2019H1, whereas the changes to 2019Q3 were more varied with gasoline
and “other” product revised higher whereas resid and gasoil/diesel were marked down. Despite the fact that reported
oil demand in October exceeded our forecast by 111 MB/D, we have lowered 2019Q4 by 140 MB/D vs. our December
outlook as the weakness in gasoil/diesel and resid bled into the fourth quarter. We lowered demand for each of these
products by 70 MB/D vs. last month. In the case of gasoil/diesel, the weather turned out to be much warmer than normal
in the quarter. In addition, the increasing displacement of diesel-powered vehicles by gasoline-powered automobiles
and, in part, electric vehicles presumably deflated diesel demand. Finally, the hoped-for boost from ship owners pre-
buying low sulfur gasoil bunkers in advance of new International Maritime Organization (IMO) rules banning high sulfur
diesel in ocean-going vessels, failed to materialize. With financial penalties for violating these rules set to start in March,
some ship owners appear to be waiting before switching fuels. As a result of these changes, annual oil demand declined
20 MB/D vs. our December outlook with oil demand growth now 40 MB/D lower.

Demand will Turning to 2020, we marked down annual oil demand by 50 MB/D as a result of lower naphtha demand, also down 50
remain weak in MB/D. This change results in a 40 MB/D decline in total annual oil demand vs. 2019. We believe naphtha demand’s recent
2020 strong showing in 2019H2 will give way this year to the increased use of LPG/Ethane as a petrochemical feedstock. We
have increased kero demand by 30 MB/D next year. Kero demand, which rarely grows less than 20 MB/D, now grows by
roughly 50 MB/D in 2020 to reflect the pickup in domestic economic growth and weak currency values relative to the
ROW. We have carried forward the 20 MB/D markdown to resid in 2019 into 2020 keeping its growth unchanged. We have
also lowered gasoline demand by 20 MB/D carrying forward the weakness first noticed last quarter. Although gasoline
demand along with electric vehicles were early beneficiaries of the reduction in road diesel demand, Europe is moving
away from ICE vehicles generally with outright bans in many major European cities on the mid-to-long-term horizon.

Looking ahead to 2021,

© 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved. 23
WORLD OIL MARKET FORECAST JANUARY 24, 2020

Japan
Pace of demand We are adjusted our forecast of GDP growth forecast for 2019 by .20%pts vs. last month while lowering 2020 growth by
decline to .1%pts. An otherwise anemic economy should get a boost from a $239 billion economic stimulus package. Under our
slowdown in 2020 latest assumptions, which include this stimulus, GDP grows 1.0% in 2019, by .4% in 2020 and .6% in 2021. There were
and 2021 3.5% fewer than normal HDDs in 2019Q4. This warmer than normal weather appears to have continued into January,
which is coming in 6% warmer than normal, which could cost 85 MB/D of oil-heat demand versus normal (almost entirely
kero).

The secular decline in Japan’s population, in combination with these assumptions, leave 2019 oil demand 140 MB/D
below 2018 levels. The decline slows to 90 MB/D this year and then to 70 MB/D in 2021. We are in receipt of the latest IEA
data through October, government (MITI) data for November, and industry data through mid-January. These latest data
reflect the weakness experienced thus far this year. As a result, we have lowered our forecast for 2019Q4 by 20 MB/D
and 2020Q1 by 10 MB/D. The major sources of weakness last quarter were “other” products revised down by 20 MB/D
vs. our December outlook and resid, which is now 10 MB/D lower. The losses this quarter were very small and scattered
across the barrel. There were no other changes relative to last month in this month’s forecast and the changes that
were made were too small to meaningfully affect annual totals vs. last month.

Although demand continues to decline across the barrel in both 2020 and 2021, resid is expected to show the greatest
weakness declining an average 35 MB/D over the next two years because of the IMO ban on high sulfur resid. Distillate,
a near term beneficiary of the ban, is essentially flat this year and falls by roughly 10 MB/D in 2021. Gasoline, naphtha and
“other” products decline by roughly 10 MB/D over the next 24 months. Our assumptions call for no significant restoration
of nuclear plants.

2020 China’s FSU demand was essentially unchanged for 2019 and 2020. FSU demand growth is forecast at 130 MB/D in 2019 and 105
demand under MB/D in 2020. For 2021
negative watch
due to coronavirus China apparent demand (equal to oil production plus net imports) was revised up by 60 MB/D for 2019 due to
outbreak significantly higher than forecast actual crude imports in December (higher imports all else equal raises apparent
demand). Resultant China annual demand growth is now forecast at 790 MB/D in 2019 and 480 MB/D in 2020. For 2021,

Emerging countries oil demand was revised up by 40 MB/D in 2019. Based on recent available data, we made downward
revisions in Singapore, India, Hong Kong, Mexico and Iraq while upward revisions were made for Saudi Aribia. We expect
emerging countries oil demand to grow 235 MB/D in 2019 and 600 MB/D in 2020. For 2021,

New forecasting New forecasting methodology: As previously mentioned, over the last few months, we have been gradually introducing
methodology has a new and more accurate forecasting methodology to estimate demand growth. As of end January 2020, this new
been shown to methodology, based on a combination of multifactor regression analysis and time series analysis, was used for
improve countries in FSU, Eastern Europe, Africa, Middle East, South and southeast Asia. Next month, we will be applying it to
forecasting Latin America and the Caribbean region.
accuracy in out of
sample tests

© 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved. 24
WORLD OIL MARKET FORECAST JANUARY 24, 2020

TABLE 4: WORLD OIL DEMAND

REVISIONS VS LAST MONTH ANNUAL GROWTH
MMB/D 2019 2020 2021 2019 2020 2021
UNITED STATES (0.06) (0.15) NA (0.03) 0.20
WESTERN EUROPE (0.02) (0.05) NA (0.17) (0.04)
JAPAN (0.00) 0.00 NA (0.14) (0.09)
OTHER INDUSTRIAL (0.01) (0.00) NA 0.00 0.03
LESS DEVELOPED 0.04 0.12 NA 0.23 0.60
FORMER SOVIET UNION (0.00) (0.01) NA 0.13 0.11
EASTERN EUROPE 0.00 0.01 NA 0.04 0.04
CHINA 0.06 0.09 NA 0.79 0.48
TOTAL 0.01 0.00 NA 0.85 1.33

TABLE 5: WORLD OIL DEMAND BY PRODUCT

REVISIONS VS LAST MONTH ANNUAL GROWTH
MMB/D 2019 2020 2021 2019 2020 2021
GASOLINE 0.03 (0.02) NA 0.19 0.17
GASOIL/DIESEL (0.11) (0.26) NA 0.23 1.04
JET KERO 0.03 0.05 NA 0.14 0.16
NAPHTHA (0.01) 0.03 NA (0.27) (0.05)
RESIDUAL FUEL OIL (0.08) 0.01 NA (0.22) (0.35)
LPG 0.11 0.12 NA 0.24 0.36
OTHER 0.05 0.06 NA 0.53 0.01
TOTAL 0.01 0.00 NA 0.85 1.33

Non-OPEC
Non-OPEC production was revised higher by 10 MB/D in 2019 and 230 MB/D in 2020. Changes by region are detailed
below.

US October
actuals stronger,
but shale growth
still seen slowing
in 2020
US crude and condensate forecast was revised up slightly in 2019 (+33 MB/D) and also in 2020 (+40 MB/D). The increase
in 2019 is due primarily to revisions from actual L48 reported EIA production for October (+168 MB/D higher than our
forecast). The increase in 2020 (+40 MB/D) is driven by higher expected performance in Alaska (+50 MB/D) and US shale
(+11 MB/D) offset by lower production in GOM (-28 MB/D).
The change in our L48 shale/non-shale outlook for 2019 (+35 MB/D) is the result of the October L48 EIA reported actual
production coming in 168 MB/D higher than our forecast. Reported production was higher for North Dakota (+63 MB/D),
Texas/New Mexico (+59 MB/D) and Colorado (+ 40 MB/D). Our shale forecast for 2020 stayed relatively unchanged from
last month’s prediction (+11 MB/D). Horizontal oil rigs have started to stabilize.

We increased Alaska production in 2020 (+50 MB/D) compared to our previous forecast based on higher expected
performance from Prudhoe Bay, Seal Island, Alpine and Kuparak fields. Also, the new Greater Mooses Tooth 1 field is
ramping up at higher rates than previously anticipated. Other North Slope projects starting in 2020 (Fiord West and
Mustang) help support strong growth (+68 MB/D) Y/Y in Alaska for 2020.

Revisions to the GOM were relatively small (-10 MB/D in 2019 and -31 MB/D in 2020). Changes in 2019 were caused by
lower actual production for October (-60 MB/D) as reported by EIA actuals. The revisions in 2020 were due to slightly
higher downtime compared to our previous forecast. The GOM is expected to have strong growth in 2019 (+136 MB/D
Y/Y) and 2020 (+67 MB/D Y/Y) due to ramp up of three recent new projects (Big Foot with 75 MB/D capacity, Appomattox

© 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved. 25
WORLD OIL MARKET FORECAST
Canada oil sands
to grow in 2020
despite
curtailments
Total Mexico oil
production is
expected to have
annual growth in
2020 of 20 MB/D
after falling 140
MB/D in 2019
North Sea
production
forecast to decline
in 2019 followed
by robust growth
in 2020
© 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved.
JANUARY 24, 2020
with 130 MB/D capacity, and Buckskin with 30 MB/D capacity) and several tie-backs. We forecast record crude
production for the GOM in 2019, with an average of 1,899 MB/D. This is close to 700 MB/D higher than production in 2013
(7% CAGR) and thanks to eleven new major projects and numerous tie-backs.
In summary, we forecast robust growth in US crude and condensate production for 2019 but much less in 2020. We
expect an average of 12, 2002 MB/D in 2019 (+ 1223 MB/D Y/Y), 12,982 MB/D in 2020 (+782 MB/D Y/Y), and 13,374 MB/D in
2021 (+392 MB/D Y/Y).
Canada crude and condensate forecast was revised down slightly in 2019 (-29 MB/D), and up in 2020 (+20 MB/D). The
revisions in 2019 were almost exclusively driven by condensate actuals being pushed down.
Bitumen and synthetic production remained mostly in line with last month’s forecast for 2019. The latest data for
November from the Alberta Energy Regulator indicated that oil sands production hit 2,986 MB/D, in line and just 11 MB/D
above our previous forecast. In 2020 we expect strong growth in the oil sands despite curtailments ongoing as crude-
by-rail exemptions allow for incremental production out of numerous expansion projects currently ramping up such as
Cenovus Christina Lake G, CNRL Kirby North, CNRL Primrose, and Imperial Oil Kearl. We forecast bitumen to grow 187
MB/D in 2020 Y/Y, while Syncrude production grows 21 MB/D.
A surging seasonal increase in rig counts in Canada over the past three weeks (+145 rigs) has led us to revise up our
conventional heavy forecast by +30 MB/D in 2020, which is now flat Y/Y. Last month’s forecast previously called for
declines of -32 MB/D in 2020 Y/Y on the back of continued weak drilling activity. We also revised our forecast for
condensate (-37 MB/D) and NGL (+17 MB/D) for 2020. The stronger than expected rig additions also continue to support
our view of strong condensate (+45 MB/D) and NGL (+41 MB/D) growth in 2020. Canada’s largest 12 operators’ currently
guide growth of 7% on average on the back of a 4% increase in CAPEX for 2020.
We expect Canadian liquids production to grow to 5,788 MB/D in 2020, which represents growth of +335 MB/D Y/Y (293
MB/D of which is crude and condensate). Growth in 2021
Mexico total oil supply forecast for 2019 was not significantly changed while 2020 was lowered by 10 MB/D. In 2019, the
actual for November crude and condensate was 5 MB/D higher than forecast. This increase was mainly due to higher
than trend results for reported Light and Superlight crudes that was partly offset by heavy KMZ crude not recovering
fully as was expected from its October dip. Looking ahead to December, we are forecasting essentially flat total
crude/condensate production at 1720 MB/D, down only 2 MB/D from the November actual. There is perhaps more risk to
this forecast than normal. This risk stems from Pemex plans as was reported in their December 2019 Investor
Presentation to start production from 17 new wells during December. If all these wells were successfully drilled,
production on December 31 could have been higher than that on November 30 by as much as 80 MB/D. But, our forecast
has discounted this. Regardless of how many oil wells started in December, the big picture view of 2019 is that Pemex
has made a very significant change to its crude production; the trend of its M/M output became flat in 2019, a major
accomplishment in comparison to 2018 when its M/M output averaged -12 MB/D. This year, November production
increased 5 MB/D versus prior year; this is in contrast to last year when production fell 150 MB/D in November 2018 versus
prior year. For 2020, crude production was lowered by 10 MB/D from last month’s forecast. Although Pemex advised in
their Investor Briefing last month that they started development of 20 new fields in 2019, we had in our December case
discounted expected production growth in 2020 from this group of fields because it was more fields than Pemex has
started to develop over the past 13 years. For this January forecast, we further discounted production growth after
reports emerged of problems that Pemex was having with proceeding with development from this group of 20 fields.
Nevertheless, we do expect some net total crude oil production growth in 2020 from this group of 20 fields and this
include in the total oil forecast for 2020 at 20 MB/D of growth, which is down from last month’s forecast for 30 MB/D of
growth but a major change from 2019 when crude production fell 130 MB/D. Growth in 2021 is forecast at 40 MB/D.
North Sea North Sea production was revised up by 20 MB/D in 2019 and 100 MB/D in 2020. Revisions to the 2019 forecast
were driven by stronger field level actuals data for Denmark and Norway. Changes to the 2020 forecast were primarily
driven by Norway in part due to faster than expected ramp up at the Johan Sverdrup field.
The most recent Denmark field level actuals, particularly for Halfdan and Dan fields, came in stronger than anticipated.
Stronger actuals were also observed, to lesser degree, across other fields due to weaker than anticipated base declines.
Similarly, in Norway, the upward revision to the 2019 forecast resulted from stronger field level actuals as well as lower
levels of seasonal maintenance than originally anticipated. In the UK, weaker production at the Buzzard field—per latest
26
WORLD OIL MARKET FORECAST JANUARY 24, 2020

field level actuals—was offset by stronger yield across multiple fields, including Clair Ridge, which resulted in total
production being in line with our 2019 forecast.

UK production will remain flat for the remainder of the year. UK production is also forecast to decline marginally Y/Y. As
well, Denmark production is forecast to decline about 20 MB/D in 2020. Meanwhile, Norway production is forecast to
grow about 200 MB/D Y/Y, driven by continued ramp up at Johan Sverdrup (440 MB/D capacity for phase 1).

We expect total North Sea production declines of 130 MB/D in 2019 followed by 170 MB/D of growth in 2020,
in 2021.

FSU forecast remained unchanged in both 2019 and 2020. Russia’s crude and condensate output averaged nearly 90
MB/D above its quota in December, the fifth straight month of undercompliance. Its new condensate exemption will
make compliance more difficult to measure going forward, but we cautiously forecast total 1Q20 crude and condensate
volumes will average 50 MB/D below December. This will still leave 300 MB/D of spare capacity. Total FSU production
grew by 80 MB/D in 2019, led by Russia (110 MB/D). FSU volumes will grow another 20 MB/D in 2020, and in
2021.

China production estimates were effectively unchanged for 2019 and 2020, whilst estimates grew by 40 MB/D in 2021.
The majority of this growth is forecasted to come from volume gains due to refinery capacity additions, with some
increases in CTL and ethanol production. Despite crude production increasing by 50 MB/D in 2019, it is forecasted to fall
by 65 MB/D in 2020 and a further 25 MB/D in 2021. The majority of the 2019 growth stemmed from offshore projects
Huizhou 25-8 and Penglai 19-3, which added roughly 55 MB/D of net output in 2019. Additionally, onshore developments
Changqing, Tarim and Xingjang, were estimated to have produced an estimated 40 MB/D collectively in the same period.
Despite these projects, there has been little else adding to China’s crude oil-growth prospects. Total liquids production
is forecasted to be 4.37 MMB/D (flat Y/Y) in 2020, and in 2021.

Brazil and other non-OPEC production was revised 30 MB/D higher in 2019, 70 MB/D higher in 2020 and in 2021.
Brazil crude production was revised 20 MB/D higher in 2019 and slightly higher for 2020 and 2021.

Brazil crude Brazil production was revised upwards by 237 MB/D for November 2019 compared to our December reference case
production was mainly from the pre-salt Lula (+94 MB/D) and Buzios (+74 MB/D) projects continuing to ramp up. Interestingly, while pre-
revised 20 MB/D salt projects have received the majority of attention, post-salt fields accounted for 55 MB/D of the uptick as operators
higher in 2019 and continue to invest in more mature assets. We maintain that substantial growth in Brazil, increasing 225 MB/D and
slightly higher for MB/D in 2020 and 2021, respectively, largely on the back of pre-salt developments, growing 340 and MB/D in the
2020 and 2021 same periods.

Guyana also started offshore production in December 2019 from the Liza project. Significant growth is forecast in 2020
and 2021 of 70 MB/D and /D respectively.

TABLE 6A: NON-OPEC OIL SUPPLY

REVISIONS VS LAST MONTH ANNUAL GROWTH
MMB/D 2019 2020 2021 2019 2020 2021
UNITED STATES (0.01) 0.04 NA 1.51 1.31
CANADA (0.03) 0.02 NA 0.09 0.34
MEXICO (0.00) (0.01) NA (0.14) 0.02
NORTH SEA 0.02 0.10 NA (0.13) 0.18
FSU 0.01 0.01 NA 0.08 0.02
CHINA 0.00 0.00 NA 0.10 (0.01)
OTHER* 0.02 0.06 NA 0.31 0.31
TOTAL** 0.01 0.23 NA 1.83 2.16
* Includes OPEC NGL/Condensate
** Gabon, Equatorial Guinea, Congo included and Indonesia, Qatar,
and Ecuador excluded from OPEC for all years shown.

© 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved. 27
WORLD OIL MARKET FORECAST JANUARY 24, 2020

TABLE 7: OPEC CRUDE PRODUCTION

2019 2020 2021
MMB/D 1Q 2Q 3Q 4Q YR 1Q 2Q 3Q 4Q YR 1Q 2Q 3Q 4Q YR
SAUDI ARABIA 10.08 9.90 9.96 9.75 9.92 9.75 9.75 9.78
KUWAIT 2.76 2.73 2.67 2.71 2.72 2.70 2.70 2.70
NEUTRAL ZONE - - - - - - 0.05 0.11
UAE 3.07 3.16 3.31 3.58 3.28 3.20 3.25 3.26
IRAQ 4.62 4.70 4.73 4.65 4.67 4.56 4.72 4.72
IRAN 2.74 2.19 1.79 1.84 2.14 1.82 1.83 1.85
ALGERIA 1.04 1.02 1.02 1.02 1.02 1.02 1.00 1.00
LIBYA 0.89 1.09 1.09 1.12 1.05 0.92 1.05 1.02
NIGERIA 1.86 1.92 1.92 1.85 1.89 1.94 1.95 1.98
ANGOLA 1.43 1.40 1.37 1.34 1.38 1.39 1.39 1.37
VENEZUELA 1.02 0.84 0.73 0.87 0.86 0.81 0.78 0.75
ECUADOR 0.53 0.53 0.54 0.52 0.53 0.54 0.54 0.54
GABON 0.17 0.17 0.16 0.20 0.18 0.18 0.19 0.19
EQUATORIAL GUINEA 0.10 0.10 0.13 0.11 0.11 0.11 0.10 0.10
CONGO 0.35 0.35 0.31 0.31 0.33 0.32 0.33 0.33
OPEC 30.67 30.09 29.74 29.85 30.08 29.26 29.65 29.69

Based on current OPEC membership. Gabon, Equatorial Guinea, Congo included and Indonesia, Qatar, and Ecuador excluded from OPEC for all years shown.

Stocks
Total Annual Stock Change. In 2019, we expect a draw of 190 MB/D on total stocks, compared to our forecast last month
for a 290 MB/D stock draw. Total world stocks are anticipated to build in 2020 by 100 MB/D, compared to a draw of 340
MB/D forecast last month. Stocks build by another 110 MB/D in 2021.

Three Major OECD stocks are forecast to build by 200 MB/D in 2019 and build by 40 MB/D in 2020. 2021 stocks seen
essentially flat (+10 MB/D).

TABLE 8: INVENTORY BUILD/DRAW, MMB/D

REVISIONS VS LAST MONTH ANNUAL STOCK CHANGE
MMB/D 2019 2020 2021 2019 2020 2021
TOTAL STOCK CHANGE* 0.10 0.43 NA (0.19) 0.10
GOV'T STOCK CHANGE 0.00 (0.03) NA 0.10 0.10
ONSHORE COMMERCIAL 0.10 0.46 NA (0.29) 0.00
THREE MAJOR OECD 0.12 0.11 NA 0.20 0.04

* After Time Phasing

© 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved. 29
WORLD OIL MARKET FORECAST JANUARY 24, 2020

TABLE 9: U.S. GULF COAST OIL PRICE FORECAST

Sour
Crude
Index #6 1% S #6 3% S #2 HOil Diesel K Jet ConvUL 3:2:1 Crk
LLS USGC HLS USGC USGC USGC USGC USGC USGC USGC USGC USGC
nom. $ $/Bbl $/Bbl $/Bbl $/Bbl $/Bbl c/g c/g c/g c/g $/Bbl
Jan-20 62.35 61.95 59.95 70.35 40.35 177.00 181.20 183.00 165.10 8.65
Feb-20 59.80 59.60 55.60 65.80 38.80 171.70 178.40 178.80 161.40 9.45
Mar-20 61.95 61.65 56.50 65.90 39.90 182.00 190.20 187.40 178.50 13.50
Apr-20 63.70 63.40 58.00 67.40 41.90 190.30 198.10 195.10 187.40 15.40
May-20 64.20 63.95 58.50 67.95 42.95 189.00 197.40 193.80 189.40 15.30
Jun-20 65.20 65.00 59.50 69.25 45.25 188.30 196.70 193.50 188.60 13.95
Jul-20 64.15 64.00 58.95 68.50 45.50 182.70 191.10 189.30 185.70 13.45
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
1Q 2020
2Q 2020
3Q 2020
4Q 2020
1Q 2021
2Q 2021
3Q 2021
4Q 2021
YR 2020
YR 2021

NOTES:
1) Gasoline reflects 87 octane.
2) Fuel oil #6 1%S reflects 6 API.
3) Diesel reflects 15 ppm.
4) 3:2:1 Crack vs. LLS
5) Beginning w ith Jan 2010, USG Sour Crude Index is intended to track the U.S. contract basis used by major Mideast
crude exporters.
6) #6 3% S USGC reflects spec change to RMG 380 in Jan-17. The difference betw een FO and RMG 380 w as recently w orth $0.40/Bbl.

© 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved. 31
WORLD OIL MARKET FORECAST JANUARY 24, 2020

TABLE 10: BRENT AND NY HARBOR OIL PRICE FORECAST

Dated
Brent
Sullom #6 1% S #6 3% S #2 HOil ConvUL
Voe NYH NYH NYH Diesel NYH K Jet NYH NYH RBOB NYH
nom. $ $/Bbl $/Bbl $/Bbl c/g c/g c/g c/g c/g
Jan-20 64.45 71.35 41.35 177.60 188.10 189.20 169.30 165.50
Feb-20 60.00 65.60 39.60 172.90 184.80 184.80 163.20 159.70
Mar-20 61.50 65.70 40.70 183.00 196.70 193.40 176.10 173.70
Apr-20 63.50 67.20 42.70 190.60 202.50 199.70 191.00 192.10
May-20 64.00 67.75 43.75 189.30 201.20 197.30 191.20 194.30
Jun-20 65.00 69.05 46.05 188.40 200.30 196.70 186.20 191.20
Jul-20 64.00 68.45 46.45 182.40 194.20 193.40 185.70 189.50
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
1Q 2020
2Q 2020
3Q 2020
4Q 2020
1Q 2021
2Q 2021
3Q 2021
4Q 2021
YR 2020
YR 2021

Notes:
1) Conventional/RFG Gasoline reflects 87 octane, RBOB reflects 83.7 octane.
2) Diesel reflects 15 ppm.

© 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved. 32
WORLD OIL MARKET FORECAST JANUARY 24, 2020

TABLE 11: KEY PRODUCT PRICE SPREAD AND CRACK FORECAST

USGC
ConvUL USGC #2 USGC USGC K USGC #2 NYH RBOB NYH #2
(nom. $) WTI @ Crack vs. HOil Crack ConvUL- Jet- #2 Hoil- #6 Crack vs. HOil Crack NYH #2 Hoil-
$/Bbl Cushing LLS vs. LLS #2 HOil HOil 3%S WTI vs. WTI #6 1%S
Jan-20 58.45 7.00 12.00 (5.00) 2.50 34.00 11.05 16.15 3.25
Feb-20 54.75 8.00 12.30 (4.30) 3.00 33.30 12.30 17.85 7.00
Mar-20 56.50 13.00 14.50 (1.50) 2.25 36.55 16.45 20.35 11.15
Apr-20 58.30 15.00 16.25 (1.25) 2.00 38.05 22.40 21.75 12.85
May-20 58.80 15.35 15.20 0.15 2.00 36.45 22.80 20.70 11.75
Jun-20 60.00 14.00 13.90 0.10 2.15 33.85 20.30 19.10 10.05
Jul-20 59.20 13.85 12.60 1.25 2.75 31.25 20.40 17.40 8.15
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
1Q 2020
2Q 2020
3Q 2020
4Q 2020
1Q 2021
2Q 2021
3Q 2021
4Q 2021
YR 2020
YR 2021

© 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved. 33
WORLD OIL MARKET FORECAST JANUARY 24, 2020

OTHER RELEVANT REPORTS

North American Midcontinent Forecast U.S. Rig Monitor Global Biofuels and Agriculture Outlook

Asia-Pacific Market Forecast Political Risk Scorecard Global Oil Spotlights

Europe Market Forecast World Market Slide Show

DOE Weekly Global Refining Outlook

Japan Weekly Global Economic Outlook

WORLD OIL MARKET FORECAST

For inquiries related to the oil market, please contact our team: globaloilanalytics@spglobal.com.
Chris Midgley, Global Director of Analytics
Shin Kim, Head of Oil Supply
Claudio Galimberti, Head of Demand, Refining and Agriculture
Rick Joswick, Head of Oil Pricing & Trade Flow Analytics
Kang Wu, Head of Analytics, Asia
Paul Sheldon, Chief Geopolitical Advisor
Sami Yahya, Supply Analyst
Tristan Reilly, Supply Analyst
Damiano Galvan, Senior Manager, Oil Demand
Nobuo Tarui, Advisor, Oil Demand
Gary Eisen, Senior Advisor, Oil Demand
Naing Oo, Advisor, Oil Demand
Vito Turitto, Manager Quantitative Analysis & Volatility

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