As you may know, many variables affect the bitumen price, bitumen export, and bitumen supplying.
These variables are the oil market changes, US elections, Opec, and some more,
that all are influential in bitumen export and market.
As the first item, we will discuss OPEC in order to see how it affects the bitumen export and market.
Variables changing the behavior of OPEC Plus
Maintaining market share and developing it are some factors in OPEC Plus calculations. OPEC Plus seeks to safeguard its current share of the oil market and
to prevent developing liquefied natural gas (LNG) from using as an alternative fuel by developing countries. While oil prices are now low, liquefied
petroleum gas is even cheaper (a barrel of energy equivalent to 6,000 cubic feet of quality gas in a pipeline).
But in developing countries, where there is much effort to reduce carbon emissions,
natural gas in the form of LNG can be instead of oil.With the low price of liquefied natural gas,
its exporters can subsidize the gas equipment of these countries and thus turn them into a market for themselves that does not benefit oil producers. Thus,
rising oil prices also make it difficult for OPEC Plus to grow its market share because it reduces its competitiveness with gas.
US elections effects on oil market & bitumen export
Another issue affecting oil prices next year is the value of the dollar index. With the massive US spill in the market in several economic packages,
the dollar price of oil will be mild. As a matter of fact, oil is traded in dollars as a commodity for a variety of reasons. So the purchasing power of oil depends largely on the value of the US dollar.
Producing countries will lose their purchasing power as the dollar depreciates if they do not raise oil prices. Additionally, the value of the dollar index has fallen by 12% since the
beginning of the year and a lot of inflationary pressure is forming.
Whether Trump wins or Biden wins,
they will try to devalue the dollar to stimulate the economy. The prospect of a weakening dollar also raises the possibility of a rise in the dollar price of oil. Therefore,
the dollar can lead to higher oil prices, both naturally and by stimulating producers.
Low therapeutic prices for low oil prices
Generally speaking, OPEC Plus can maintain current production levels and let nature set aside weaker producers (shale). Moreover, current low prices have taken Wall Street out of the US shale
for the expected future. This situation will continue to reduce threats to OPEC Plus’s share of production.
Furthermore, less drilling will mean less oil production and a more limited supply as demand recovers. Currently, the number of drilling rigs is low. With a market of 94 million barrels today,
Baker Hughes reports that the number of active drilling rigs outside the United States has dropped by 40% since the beginning of the year to 752 units.It’s also good to note that there has been a dramatic decline in the Middle East,
which has the highest production rate of wells, from 430 to 282.
The last time the global oil market produced 94 million barrels per day – and it was growing – dates back to 2014. At that time, the Middle East had an average of 406 active drilling rigs,
and the total number of rigs outside the United States was 1,517. US drilling rigs also fell to 406 in September from the 2014 peak of 1930. American drilling is far below the level required to maintain production. It only takes time for US production to fall further;
this is something that both OPEC Plus and American oil companies know.
Organization of the Petroleum Exporting Countries (OPEC)
The Organization of the Petroleum Exporting Countries (OPEC) predicts that daily demand and
bitumen export in 2021 will fall by 6,540,000 barrels to 96,840,000 barrels, which is 80,000 barrels per day lower than forecast last month (September). Besides, the price of the oil basket of the Organization of Petroleum Exporting Countries
(OPEC) fell below $ 41 on the first Thursday of November.
In addition, the price of the OPEC oil basket was recorded at 40 dollars and 91 cents yesterday,
while on Wednesday (October 20) it was 40 dollars and 88 cents. As an important note,
OPEC oil basket includes 13 types of crude oil members of this organization such as Algeria, Girasol Angola, Robin Gabon style,
Minas Indonesia, Basra style, Kuwait export, Al-Sadr Libya, Nigerian Bonni style, Saudi Arabian style, UAE Morban, Mary Venezuela and Genoa Congo. On the other hand,
Brent and West Texas Intermediate (WTI) were at $ 42.69 and $ 40.85 a barrel, respectively, Friday, November 2.
What the World Bank expects of the oil and bitumen export
The World Bank expects the average price of oil next year to be $ 44 per barrel, slightly higher than the average of $ 41 per barrel this year.According to Oil Price, the World Bank said in a report on commodity markets outlook
on Thursday that energy prices, especially oil, have been hit hardest by the Corona crisis and will not rise much next year. Consequently, the bank forecast oil prices to average $ 44 a barrel next year.
According to the World Bank, oil prices will not return to previous levels until 2022,
when agricultural and metal products have almost reached their pre-crisis value.”Despite a sharp drop in production,
the trend of improving oil prices has recently stalled due to concerns about a new wave of the Coronavirus epidemic and its impact on oil consumption,”
the bank said in a statement.
To sum up
As they believe, oil demand next year will be lower than in 2019 in almost all countries except China,
so oil prices will not rise above current levels.The World Bank expects the average price of oil next year to be $ 44 per barrel,
slightly higher than the average of $ 41 per barrel this year. Needless to mention that the projected price for 2021 is
still a long way from an average of $ 61 per barrel in 2019. According to the bank,
the price of natural gas will increase in 2021 because its consumption is improving along with the world economy.These were some items that affect the bitumen export,
oil market, and oil demands. We have also mentioned some forecasts and predicts of the future of oil market in 2021.