• 15 hours PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 17 hours Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 19 hours Syrian Rebels Relinquish Control Of Major Gas Field
  • 20 hours Schlumberger Warns Of Moderating Investment In North America
  • 21 hours Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 22 hours Energy Regulators Look To Guard Grid From Cyberattacks
  • 23 hours Mexico Says OPEC Has Not Approached It For Deal Extension
  • 1 day New Video Game Targets Oil Infrastructure
  • 1 day Shell Restarts Bonny Light Exports
  • 1 day Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 1 day Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 2 days British Utility Companies Brace For Major Reforms
  • 2 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 2 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 2 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 2 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 2 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 2 days Rosneft Signs $400M Deal With Kurdistan
  • 2 days Kinder Morgan Warns About Trans Mountain Delays
  • 2 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 3 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 3 days Russia, Saudis Team Up To Boost Fracking Tech
  • 3 days Conflicting News Spurs Doubt On Aramco IPO
  • 3 days Exxon Starts Production At New Refinery In Texas
  • 3 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 4 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 4 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 4 days China To Take 5% Of Rosneft’s Output In New Deal
  • 4 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 4 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 4 days VW Fails To Secure Critical Commodity For EVs
  • 4 days Enbridge Pipeline Expansion Finally Approved
  • 4 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 4 days OPEC Oil Deal Compliance Falls To 86%
  • 5 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 5 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 5 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 5 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 5 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 5 days Aramco Says No Plans To Shelve IPO
Alt Text

What’s Stopping An Oil Price Rally?

Oil prices rallied in Q3…

Alt Text

Footloose Iraq Cannibalizes Saudi Market Share

OPEC’s de-facto leader Saudi Arabia…

Alt Text

Why Petrol Powered Cars Aren’t Going Anywhere

Internal combustion engines are still…

Matt Smith

Matt Smith

Taking a voyage across the world of energy with ClipperData’s Director of Commodity Research. Follow on Twitter @ClipperData, @mattvsmith01

More Info

Rising OPEC Oil Production Worsens Glut

Rising OPEC Oil Production Worsens Glut

One hundred and fifty-three years after the fire extinguisher was patented by Alanson Crane, and the overnight rally in the crude market has once again been snuffed out. After double bearish trouble yesterday came in the form of the IEA and EIA monthly reports, today’s OPEC report has again put a damper on things.

Although last night’s API report yielded a build to crude stocks of 2.4 million barrels, it was less than the consensus of 3.6 million barrels. We here at the good ship ClipperData were expecting a much lesser build – or even a surprise draw – as inclement weather in the Gulf of Mexico has delayed the discharging of cargoes in the last week. We still see over 20 million barrels still waiting to discharge, over double the usual volume, as weather continues to cause delays. As for gasoline inventories, last night’s API report is stoking expectations of a larger build than the consensus of 0.4 million barrels. Related: Iran Signs Oil Deal With Total, Deal Done In Euros

Ahead of today’s EIA inventory report, we have had little in the way of economic data, with the main bits being a spate of industrial production numbers out of Europe: Italy, France, and old Blighty all showed disappointing prints on this front. Federal Reserve Chair Janet Yellen is ruffling market feathers today as she delivers the first part of her Humphrey-Hawkins testimony.

After yesterday’s monthly report from the IEA and EIA, the circle is now unbroken with the arrival of OPEC’s monthly oil report today. It too has carried on the theme of an ongoing market imbalance; based on the cartel’s current output, the market is oversupplied by 1.84 million barrels per day this quarter.

In terms of non-OPEC oil supply, the cartel has made a downward revision of 40,000 bpd, seeing production decline by 700,000 bpd this year, driven by recently announced capex cuts by various international oil companies. It also marginally adjusted its oil demand growth expectations lower for this year, now at +1.25 million bpd. Even though non-OPEC supply is set to be below last year’s levels, it is still expected to be higher than three of four quarters in 2014. Related: Hopes Fall on Emergency OPEC Meeting

(Click to enlarge)

While OPEC expects Canadian production to increase this year by 70,000 bpd to 4.46 million bpd, led by oil sands development, it expects Mexican oil production to drop by 130,000 bpd to 2.47 million bpd. This follows a drop of 200,000 bpd in 2015.

(Click to enlarge)

All the while, OPEC’s output continues to rise. According to secondary sources, output increased 103,000 bpd last month. The biggest increases came from Nigeria (74,000 bpd), Iraq (60,000 bpd), Saudi Arabia (44,200 bpd) and Iran (38,100 bpd), while Angola and Venezuela saw the biggest drops at 39,200 bpd and 34,500 bpd, respectively.

While the latest OPEC report shows Kuwaiti crude production averaging very close to 2.75 million bpd in the last two years, Kuwait Petroleum Corp has just announced that it plans to boost production by 150,000 bpd by Q3 of this year, and is planning to sign export deals with European companies. Kuwait holds the sixth largest oil reserves in the world, over 100 billion barrels. According to our ClipperData, less than 6 percent of Kuwait’s crude exports currently head to Europe. The usual suspects for OPEC barrels are the most common destination: South Korea, India, China and Japan. Related: In Spite Of Oil Price Slump, Speculators Drive Bets To Record Levels

Finally, the chart below illustrates that Chinese domestic crude production is likely to fall this year, amid a lack of investment. Sinopec (aka CNPC) said its production dropped 5 percent last year, while Petrochina said its production fell by 1.5 percent through the first three quarters of 2015. These two account for approximately 75 percent of Chinese oil production.

As Chinese oil demand is set to rise again this year – driven by domestic strength in gasoline demand or ongoing strategic stockpiling (hark, the National Bureau of Statistics point to 113 million barrels of storage under construction for this year), China looks set to import over 60 percent of its needs.

By Matt Smith

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • Russian Jew on February 10 2016 said:
    "While OPEC expects Canadian production to increase this year by 70,000 bpd to 4.46 million bpd" - Canadians are losing right now about $15 on each barrel they produced. Yes, they gonna increase production to finish themselves off faster and not to prolong suffering.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News