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Monday, April 12, 2021

Dated Brent boosted by vaccine news a month ahead of Guyana’s final oil lift for 2020

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OilNow is an online-based Information and Resource Centre which serves to complement the work of all stakeholders in the oil and gas sector in Guyana.

Rare positive news amid the coronavirus pandemic pushed crude oil flat prices, including the flat price Dated Brent benchmark, sharply higher on Monday, although physical differentials remained stuck in negative territory for some BFOET grades, S&P Global said in a report this week.

The cautious optimism in the oil market comes after months of deep concern and renewed fears over the potential impact a second pandemic wave could have on demand. These factors have now become important for the South American country of Guyana, a new oil producer whose Liza crude grade is in the first year of its introduction to the market.

S&P Global Platts assessed the Dated Brent benchmark at $41.31/b November 9, up 7.9% or $3.01/b from Nov. 6. This is the highest the benchmark has been assessed at since October 22. The bullish effect on flat prices came on the back of reports that petrochemical giant Pfizer and BioNTech had recorded a 90% success rate in its phase 3 COVID-19 vaccine trial.

While the Dated Brent benchmark saw flat prices rise, physical differentials remained under pressure as supply length built up in the North Sea amid weak end-user demand, S&P Global Platts said.

Guyana has so far lifted 3 one-million-barrel oil cargoes from the Liza Destiny FPSO operating off its coast, representing its share of oil being produced by ExxonMobil at the Liza Phase 1 Development. The country’s final lift for the year is scheduled for December, a month later than previously anticipated.

“We just have one FPSO out there and…at the end of this year we’ll have close to 200 million US dollars from that one FPSO,” Vickram Bharrat, Guyana’s Minister of Natural Resources told OilNOW.

In February, Guyana’s first cargo sold for $55 a barrel, before the worst of the oil price collapse.

According to S&P Global Platts, the Dated Brent differential – which is added to the North Sea strip to give the overall Dated Brent value – has fallen more than 40 cents/b through Q4 so far, reaching a low of minus 67 cents/b on October 27, as market participants looked to try to attract interest for floating and upcoming barrels.

The U.S. Energy Information Administration forecast that oil prices will average $40/b through the end of 2020 and $47/b in 2021.

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