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Global Economic Conditions Implications for Oil & Gas Markets
Presented to IPLOCA 50th Annual Convention
15 September 2016
Laura Speake, PhD Regional Chief Economist Views represented in this presentation are that of the speaker and may not represent the views of her employer.
Economic Growth
Industrial Growth
Oil Demand
Natural Gas Commercial/Residential
Transportation Demand
3025201510
10
8
6
4
2
0
10
8
6
4
2
0
AfricaIndia
ChinaMiddle East
Source: EIA /Haver
3025201510
3
2
1
0
-1
-2
-3
3
2
1
0
-1
-2
-3
Total Primary Energy Consumption - % chg Y/Y
OECD EuropeOECD Asia
US
Source: EIA /Haver
3025201510
3
2
1
0
-1
-2
-3
3
2
1
0
-1
-2
-3
OECD EuropeOECD Asia
US
Source: EIA /Haver
Energy Demand %
Cha
nge
Y/Y
% C
hang
e Y/
Y
History History Forecast Forecast
1615141312
58
56
54
52
50
48
58
56
54
52
50
48
Composite PMI (SA, 50+=Expansion)
DevelopedDeveloping
Source: Markit /Haver(Data through Jul 2016)
Leading Indicators
15100500959085
120
110
100
90
80
70
60
120
110
100
90
80
70
60
EU28: Economic Sentiment Indicator
SA, Long-term Average=100
Source: EC /Haver
Leading Indicators
(Data through Aug 2016)
Economic Outlook
Commodity prices no longer a drag
Weak but positive growth
Weak but positive growth
Improving economies
Fiscal budgets challenged w/ oil prices
Stabilizing at low levels
Oil – Supply & Demand
90919293949596979899
1Q 2
013
2Q 2
013
3Q 2
013
4Q 2
013
1Q 2
014
2Q 2
014
3Q 2
014
4Q 2
014
1Q 2
015
2Q 2
015
3Q 2
015
4Q 2
015
1Q 2
016
2Q 2
016
3Q 2
016
4Q 2
016
1Q 2
017
2Q 2
017
3Q 2
017
4Q 2
017
Demand Production
World oil (liquids) demand and production by quarter
Source: IHS © 2016 IHS
Mill
ion
barr
els
per d
ay
• Oil demand growth estimated to be 1-1.2m b/d
• NonOECD growth is 90% - mostly China & India
• Inventory to remain elevated
US Oil Production
16151413121110
9,750
9,000
8,250
7,500
6,750
6,000
5,250
120
100
80
60
40
20
Crude Oil Production: Total US, 4 Week AverageThous. Barrels/Day
Spot Price: West Texas Intermediate 40 Deg$/Barrel
Source: EIA /Haver
Global Shale Oil Production
Natural Gas – Supply & Demand
• Dominated by Regional Markets
• Pipeline vs LNG • Limited Storage Capacity
Global Shale Gas Production
Global Shale Gas Production
Forecast Risks Economic Risks • Fed tightens monetary policy
too quickly • Chinese economy slows more
rapidly • Geopolitical shock
Oil & Gas Risks • Libya & Nigeria return to full
production • US Shale ramps back up
sooner