Analysts Outline Industry Themes for 2019
“This will give companies greater flexibility to increase their CAPEX and assume more risk. There are signs that exploration is beginning to recover and this trend will continue into the new year, with increased licensing activity, data acquisition and drilling globally,” the analysts added.
Despite rising revenues and the pressing need for reserves replacement, companies will face continued constrains on their exploration spending, FSMR analysts stated.
“Financial discipline continues to be a key concern for oil companies globally and will weigh on CAPEX growth next year. That said, improved capital efficiency and lower services cost means companies can effectively do more with less,” the analysts added.
Crack Spreads Remain Diverged
Diesel cracks will continue to provide refiners a buffer against declining gasoline margins, according to the analysts.
“We expect diesel demand to increase from growth in the transportation of goods, shipping and heavy construction. The implementation of IMO 2020 will further increase demand as low sulphur fuel oil which will be needed by shippers to comply and is expected to be in short supply,” the analysts stated in the report.
“Gasoline cracks will continue to suffer as excess supply and waning demand create downside pressures. In addition, the higher demand for middle distillates especially diesel and jet fuel will stimulate more supply which will exacerbate surpluses of gasoline,” the analysts added.
“We expect that the imbalance in gasoline supply and demand will continue beyond 2019 with diesel spreads supporting refiners’ revenues,” the analysts continued.
View Full Article
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.