- The counteracting forces of rising tensions in the Middle East and concerns over global oil demand growth have kept crude prices rangebound. While OPEC and partner countries agreed in early July to extend production cuts through 1Q 2020, concern around demand growth is expected to continue to pressure crude pricing. Beyond the production cuts, liquids growth elsewhere in the world, namely the US, is forecast to keep global liquids markets long between 2020 and the first half of 2022. This continued mismatch in global balances led to a reduction in the WTI forecast by an average $3.33/bbl in 2021 and $6.00/bbl in 2022. BTU Analytics models that current OPEC+ production cuts will be extended through the end of 2020.
- Multiple crude pipeline projects serving the Bakken, DJ Basin and Powder River Basin could lead to a potential overbuild of pipeline capacity in the region, which could cause pricing differentials to WTI to tighten to the marginal cost of transport. Potentially offsetting some of the gains in these expansions are four inbound projects proposed from Canada that could add 275 Mb/d to 340 Mb/d of new inbound supply to the region, depending on crude quality.