• 3 hours UK On Track To Approve Construction of “Mini” Nuclear Reactors
  • 7 hours LNG Glut To Continue Into 2020s, IEA Says
  • 9 hours Oil Nears $52 With Record OPEC Deal Compliance
  • 12 hours Saudi Aramco CEO Affirms IPO On Track For H2 2018
  • 14 hours Canadia Ltd. Returns To Sudan For First Time Since Oil Price Crash
  • 15 hours Syrian Rebel Group Takes Over Oil Field From IS
  • 3 days PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 3 days Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 3 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 3 days Schlumberger Warns Of Moderating Investment In North America
  • 3 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 3 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 3 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 4 days New Video Game Targets Oil Infrastructure
  • 4 days Shell Restarts Bonny Light Exports
  • 4 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 4 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 4 days British Utility Companies Brace For Major Reforms
  • 4 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 4 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 4 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 4 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 5 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 5 days Rosneft Signs $400M Deal With Kurdistan
  • 5 days Kinder Morgan Warns About Trans Mountain Delays
  • 5 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 5 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 5 days Russia, Saudis Team Up To Boost Fracking Tech
  • 6 days Conflicting News Spurs Doubt On Aramco IPO
  • 6 days Exxon Starts Production At New Refinery In Texas
  • 6 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 6 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 6 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 6 days China To Take 5% Of Rosneft’s Output In New Deal
  • 6 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 6 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 7 days VW Fails To Secure Critical Commodity For EVs
  • 7 days Enbridge Pipeline Expansion Finally Approved
  • 7 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 7 days OPEC Oil Deal Compliance Falls To 86%
Irina Slav

Irina Slav

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

More Info

OPEC’s Bearish Report Provides Little Hope For Oil Markets

Onshore rig

Just one day after the IEA warned the world could drown in oil if production does not fall beneath demand sometime soon, OPEC released a new market whammy, offering up the cartel’s production figures, which largely jive with figures reported by the IEA yesterday: OPEC has increased its oil production.

OPEC’s Monthly Oil Market Report revealed daily oil production for the cartel of 33.64 million barrels for October—up by 240,000 bpd on September—largely confirming the IEA’s report, although the international authority’s figure was a bit higher at 33.83 million bpd.

OPEC’s calculations had the increase over September, on the other hand, a bit higher than the figures published by the IEA.

The OPEC report uses daily output amounts as reported by secondary sources rather than by the members themselves, since the latter are often higher than the former. This output calculation methodology was a bone of contention for Iraq in September when negotiations about an output cap began. Regardless of which production figures are used, secondary or direct, it’s now clear that the global supply glut will not ease during this time of increased production.

On a somewhat brighter note, according to the group, non-OPEC supply this year would be some 780,000 barrels lower than it was in 2015. However, this is expected to rise in 2017 by 230,000 bpd—a figure a bit below the October over September production increase by OPEC members.

In contrast, the IEA predicted a 500,000-barrel increase in oil production outside the cartel for 2017. OPEC’s estimates put non-OPEC production next year at an average daily of 56.43 million barrels. This, added to OPEC’s October rate of production, would give the world almost 91 million barrels of oil per day. Related: President Trump: This Is How To Bring Back 1 Million Energy Jobs

But the interesting breakdown presented by OPEC in this latest report is that demand for OPEC crude in 2017 would stand at 32.7 million barrels per day. With their current production at 33.64 million barrels per day, that’s a net inventory gain of 940,000 barrels of crude per day, based on OPEC supply vs. OPEC demand (or 1.1 million barrels per day if you use IEA figures released yesterday. Even if a freeze does take shape sometime in 2017 using the minimum amount discussed at the Algiers meeting, which was 32.5 million bpd, we’re talking about a 200,000 barrel per day decrease in inventory in the world of OPEC. Between Algiers and now—and likely between now and next year, OPEC is adding to the supply side of that equation daily, which would push out further and further any takeaways from inventory.

Hypothetically—it’s possible that these production figures could result in some easing of inventories in 2017 on a global level, since OPEC expects global oil demand next year to hit 95.55 million barrels of crude per day. If its estimate is correct, the global glut could possibly begin to ease at some point during the year. That said, it remains unclear just how much crude is currently being kept in storage, and how long it will take to get rid of however much that is. Related: U.S. Oil Rig Count Inches Up As Production Jumps

The easing of the global glut—thought by some to be even a shortage at some point in 2017— is more than likely to remain just a hypothetical, given some non-OPEC producers’ intentions, stated directly or in a veiled manner, to continue expanding production, and OPEC’s very own Saudi Arabia’s threat that it would raise production to 11-12 million barrels if all its co-members do not agree to take part in the freeze—notably Iran.

“The Saudis have threatened to raise their production to 11 million barrels per day and even 12 million bpd, bringing oil prices down, and to withdraw from the meeting,” according to an OPEC source, as quoted by Reuters. The comment was denied by OPEC senior officials.

If Iran digs in and refuses to cut, and Saudi Arabia digs in and refuses to take on most of the cutting itself, thereby giving up market share, OPEC will continue to add to the glut, further straining heavily oil-dependent economies.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • adec on November 13 2016 said:
    another clueless/misleading article by the author. Saudi Arabia oil minister has said cut is imperative...Go figure

Leave a comment




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