There is a little more clarity in oil market pricing, but still huge uncertainty on where things are going. The COVID-19 outbreak still poses questions on the extent to which energy demand will be affected. Production cuts announcements by OPEC+ countries are adding volatility to an already fragile market equilibrium. Speaker Steve Christy is Director of Strategic Communications at Navig8 Group and has more than 30 years’ experience in the oil sector. Steve has been with Navig8 and Integr8 for the last 5 years, covering the macro-economic and pricing issues in the oil and shipping industry.

1. 0

2. The demand impact from worldwide ‘shutdowns’ is
huge & dwarfs OPEC’s original proposed cutbacks
1
-3
-2
-1
-2
-9
-18
-11
-6
-4
Feb JulJan Mar
-6
-10
-5
MayApr
-2
AugJun Sep Oct Nov Dec
-1
-19
-12
-4
-2
-1 -1 -1
China
Rest of the World
Quarterly Average
Goldman Sachs coronavirus impact on world oil demand in 2020 (25TH MARCH 2020)
million b/d (year-on-year)
SOURCE: GoldmanSachs

3. The biggest demand impacts are for jet, gasoline &
gasoil markets; fuel oil is around 10% down
2
Estimated near-term loss in oil demand by product (year-on-year)
million b/d % change
-77
-26
-16
-10
-8
-2
-2
-9
Gasoil
Gasoline
Jet Fuel
Other
Naphtha
Fuel Oil
LPG
Kerosene
-5.5
-6.9
-4.7
-0.7
-1.0
Jet Fuel
Gasoline
LPG
Naphtha
Gasoil
Fuel Oil
Kerosene
Other

4. This year started with Covid-19 concerns in China,
then breakdown of an OPEC+ agreement, BUT NOW
3
Brent & Canadian crude oil prices
$/bbl
11
0
10
20
30
40
50
60
70
80
23-Mar9-Mar30-Dec 13-Jan 6-Apr24-Feb27-Jan 10-Feb 20-Apr
-13
Canadian crude index
Brent futures (front month)
Dated Brent (physical crude)

5. Prices for all oil products have collapsed in-line with
crude and bunkers are no exception
but with some subtlety; bunker prices have strengthened relative to crude
4
VLSFO delivered prices
$/ton
10
20
30
40
50
60
70
80
100
200
300
400
500
600
700
800
30-Dec-19 13-Jan-20 27-Jan-20 10-Feb-20 24-Feb-20 9-Mar-20 23-Mar-20 6-Apr-20
-481
Dated Brent crude oil (right axis)
Singapore VLSFO
Fujairah VLSFO
Rotterdam VLSFO
Dated Brent crude
$/bbl

6. Other analysts are predicting a similar shaped curve,
but the extent of the demand collapse varies
5
-6
-4
-8
-20
-9
-2
-23
-30
-25
-20
-15
-10
-5
0
5
-13
Feb MayJan JulAprMar Jun Aug Sep Oct Nov Dec
Coronavirus impact: loss in world oil demand in 2020
million b/d (versus year earlier)
Wood Mackenzie (30th March)
quarterly average of all
Rystad quarterly average
EIA (7th April)
Rystad (7th April)
Golman Sachs (25th March)
IEA (Apr 15th)

7. General view is we hit a peak in April, the position
eases over the rest of 2020 & then increase in 2021
6
-6
-11
-20
-13
-7
-6
-4
7
12
20
14
9
6
5 4 3 2 2
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
OctAprJan
2020
AprJul
-8
OctJan
2021
-9
Jul
-2
-14
-28
-19
-13
-11
-5
-4
-2 -1
Year-on-Year change in world oil demand
million b/d (versus year earlier)
Average demand loss
Higher demand loss

8. In early March OPEC proposed a 1.0-1.5 million b/d
cutback; this failed & Saudi opened the taps
7
Middle East OPEC crude production – excluding Iran
million b/d
Jan-16
21
Jan-15Jan-14 Jan-17 Jan-18 Jan-20Jan-19
17
18
19
20
23
22
Jan-13
All Mid East OPEC
at peak levels
of past 4 years
OPEC proposal
(early March)
+2.7
-0.7
SOURCE: Wood Mackenzie, Navig8 Research

9. OPEC+ will cut some 10 million b/d in May/Jun
then around 8 million b/d in 2H 2020
and close to 6 million b/d in 2021
8
0
2
4
6
8
10
May
2020
7.7
Jul Oct Jan
2021
Apr Jul Oct
9.7
5.8
OPEC
OPEC +
Jan
2022
Apr
2.5
1.1
0.7
0.6
0.4
0.3
0.2
0.1
2.5
0.4
0.2
0.2
0.1
0.1
Saudi Arabia
Iraq
Algeria
Kazakhstan
Kuwait
Congo
Gabon
Russia
Eq. Guinea
Malaysia
Sudan
Mexico
Bahrain
Brunei
Azerbaijan
Nigeria
UAE
Angola
Oman
South Sudan
OPEC+ cutbacks May/June 2020
OPEC + agreed cutbacks & timings (million b/d)

10. US production is forecast to fall, but gradually and
this is an economic outcome, not a political decision
9SOURCE: EIA
15
20
25
30
35
40
45
50
55
60
10.5
11.0
11.5
12.0
12.5
13.0
MayJan
2020
MarFeb Apr Jun Jul Aug Sep AugOct Nov Dec Jan
2021
Feb DecMar Apr May Jun Jul Sep Oct Nov
-1.8
US crude production (Apr 2020 forecast)
WTI price (Apr 2020 forecast)
US crude production
million b/d
WTI price
$/bbl
US upstream spending down by around 30%

11. The pressures are clear; a major production cut was
needed and held for more than this year
10
75
80
85
90
95
100
105
OctJan
2019
Apr Jul AprJan
2020
Oct Apr Jul Jan
2021
Jul Oct
Demand*
Supply
OPEC+ agreement plus
declines in US, Canada
and Brazil
-12.2
Oil Supply/Demand outlook (based on OPEC+ agreement & other production ‘losses’)
million b/d
* Based on average demand impact from Wood Mackenzie, Goldman Sachs, EIA, Rystad
SOURCE: Wood Mackenzie, GoldmanSachs, EIA, Rystad, Navig8 Research

12. We are in a period of massive and unprecedented
stockbuild; can it be reversed and how quickly?
11
-6
-4
-2
0
2
4
6
8
10
12
14
16
18
20
Apr Jan
2020
Jan
2019
OctJul Apr OctJul JulJan
2021
Apr Oct
Stock Change – implications from OPEC+ agreement & other production losses
million b/d
quarterly average
Stock Change

13. If the demand loss is even greater, stocks will
decline BUT remain high through 2021 as well
12
-500
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Oct
estimated available
land-based storage
Jan
2019
Jan
2021
OctApr Jul JulJan
2020
Apr OctApr Jul
Higher Demand Loss case
Oil stocks above Jan 1st 2019 position (crude + products)
million bbls
Oil stocks relative to Jan 1st 2019
(No cutbacks & average demand loss)
OPEC+ agreement,
production declines
elsewhere & average
demand loss

14. There are huge uncertainties in demand, production
recession – we have to continue to watch closely
13
0
10
20
30
40
50
60
70
80-500
0
500
1,000
1,500
2,000
2,500
3,000
3,500
OctJulJan
2019
Apr Jan
2020
Apr Jul Oct Jan
2021
Apr Jul Oct
Oil stocks above Jan 1st 2019 position
million bbls
stocks - Higher Demand Loss (left axis)
Dated Brent (right axis)
stocks - Average Demand Loss (left axis)
Brent futures (15 Apr)
Dated Brent price (INVERTED)
$/bbl

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14
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