Oil and gas
BMI has forecast that the US will continue to lead gains in non-OPEC crude oil production in the coming years. The company has also forecast crude oil and NGLs production to increase from 2014 levels of 12.4 million bpd to 15 million bpd in 2023. However, the high growth rates that have been seen in recent years are expected to moderate through the next decade which will reflect abrupt depletion rates of oilfields, a glut in the domestic market for light sweet crude, as well as lower oil prices dampening some production.
The consumption of fuels is expected to be rather stagnant through the next 10 years as energy efficiency improvements really kick in. As a whole, consumption patterns in the US have gone through a structural shift towards much greater fuel economy and efficiency. BMI expect that demand for motor gasoline, comprising the lions share of US fuels consumed, will indeed decline over the course of the next decade. However, BMI do anticipate fuel consumption to experience a slight uptick through 2017 as consumers react to lower gasoline prices as well as gains in distillates and LPG consumption. BMI has further said that this increase in distillate and LPG production will accelerate the US’ recent shift from net fuels importer to net fuels exporter. However it has also pointed out that whilst it is not advocating energy independence for the US, it believes the US will become an increasingly important fuels supplier to Latin America, Europe and Asia.
When it comes to the gas market, BMI forecast a ramp up in production when demand gears up from 2017 onwards as new LNG and petrochemical plants and export facilities come online.
Last year, the US petrochemicals sector saw a decline in resins output and sales, according to BMI. However, with capacity growth set to decrease in to 2016 at the earliest, BMI is expecting a tightening of markets this year which should help protect margins from foreign competition.
BMI has also said that the US petrochemicals sector has continued to expand on the back of growth in ethane availability as a result of shale gas exploitation. As exports and domestic demand grows, industrial growth is firming and giving a positive scenario over the medium term. However, BMI has pointed out that a glut in global capacity as a result of new crackers in the country will put pressure on margins in the long term.
Adapted from press release by Rosalie Starling