Date 15 May 2019

By: Daorung Tirawongkusol

PTTGC

Crude Oil Market Outlook

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1. Crude Oil Short Term : Sideway

Crude 2018 2019 (F) Jan’19 Feb’19 Mar’19 Apr’19 MTD 10 May 13 May

Dubai 69.4 68.8 59.1 64.6 66.9 71.0 69.9 70.1 71.0 (+0.85)

Dated Brent 71.0 69.9 59.5 64.0 66.1 71.3 71.1 71.9 72.3 (+0.47)

Main Factors (May-June):

1. OPEC+ cut oil production until June2. Geopolitical Tension; Venezuela, Iran, Nigeria, Libya3. Russia supply loss due to Chloride contaminated4. U.S. Crude oil production increase5. The U.S. increased tariffs in all Chinese goods to 25% from 10%6. Asia refineries turnaround & lower economics growth forecasting

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Historical Brent & Dubai Crude Price ($/BBL)

Brent

Dubai

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2. Crude Market Outlook – Short term

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3. Iran oil waivers end on 1st May,

OPEC could increase capacity to compensate

May 18: The U.S. withdraw Iran nuclear deal and re-impose new sanction on Iran.

Nov 18: The U.S. administration had granted waivers to 8 countries — China, Greece, India, Italy, South Korea, Japan, Taiwan and Turkey for a duration of 180 days.

Nov 18 to Mar 19: Flow of Iranian oil export shown higher-than-expected March volumes, but April loadings will fall dramatically on waiver uncertainty.

May 19: US to end Iran oil waivers After May 2 expiration.

22 Apr 19: A sudden removal of Iranian crude from the market -- about 1.1 MBD -- could fuel volatility and lead to a price spike.

2 May 19: US to end sanctions exemptions for major importers.

The White House announced that the U.S. will work with OPEC members Saudi Arabia and the UAE “to take timely action to assure that global demand is met as all Iranian oil is removed from the market.”

Spare capacity estimate for Y2019 of OPEC could compensate loss of Iran supply OPEC = 1.7 MBD (Saudi 1.2 MBD, Kuwait 0.15 MBD, UAE 0.23 MBD)

TimelineIran oil export volume (MBD)

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4. U.S. crude stock fell 4 MB last week, compared with

analysts’ forecast a 1.2 MB build

Source: EIA

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5. North Sea T/A season peak in 2Q

Production Outage by Export Regions

IN SUMMARY

• Russian production loss to 10.99 MBD for May

2019 due to contaminated with organic

chlorides at the Druzhba pipeline

• Could take several weeks to remove all

contaminated from the pipeline section.

• Norway’s Ekofisk maintenance to cause a

big drop in North Sea output in June

• Impact output by 220 KBD, the M-O-M

decrease in June to 2.31 from 2.64 MBD

(Thousand barrels per day)

Ekofisk Blend production & outage forecast

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6. Inevitable impact of U.S. & China

IN SUMMARY

• Bank of American Merrill Lynch – Every 1% drop in global trade activity that be

effect from trade war, will push global oil demand drop by 44 KBD.

• WTO – Global trade activity is about 34,770 $bn.

• ASSUMPSION :

If all 400 $bn drop from 34,770 $bn. (-1.15%) Oil demand may drop by 51 KBD.

(Approx. 3% of oil demand growth in 2019)

• China will likely react with duties on crude and higher tariffs on LPG and LNG

• Chinese buyers are highly likely to stop sourcing US crude, but will remain

cautious about backfilling Iranian barrels.Remarks: IEA – oil demand growth in 2019 : 1.4 MBD

Thank You