2Q 2020 –
- WTI pricing is expected to remain near $40/bbl for the remainder of 2020 as OPEC+ slowly adds production back into the market and refinery throughput seasonally slows. Longer term, the gradual recovery in global liquids balances will lead to higher pricing. However, if prices rise too fast, OPEC+ producers would be incentivized to cheat on agreed production curtailments, keeping a ceiling on prices.
- While US crude production is expected to decline over the next two years, regional pricing differentials are expected to remain tight to Cushing. If courts were to rule against the Dakota Access Pipeline (DAPL) causing it to be shut down while awaiting its Environmental Impact Study from the Army Corps of Engineers, differentials would widen both in the Bakken and, to a lesser extent, at Guernsey. Upon the mid-2021 arrival of Bridger’s South Bend Pipeline, assuming DAPL is still shut, Bakken differentials could be expected to ease slightly, but Guernsey differentials would further widen as pipeline takeaway capacity is exhausted.