Archive for the ‘OPEC oil production’ Category
In this post I present developments in world crude oil (including condensates) supplies since January 2007 and per June 2016. Further a closer look at petroleum demand (consumption and stock changes) developments in the Organization for Economic Cooperation and Development (OECD) for the same period and what this implies about demand developments in non OECD.
The data used for this analysis comes from the Energy Information Administration (EIA) Monthly Energy Review.
- The OECD has about half of total global petroleum consumption.
- Since December 2015 OECD total annualized petroleum consumption has grown about 0.2 Mb/d [0.5%].
[Primarily led by growth in US gasoline and kerosene consumption, ref also figure 6.]
- The OECD petroleum stock building was about 0.4 Mb/d during Jan-16 – Jun-16, which is a decline of about 0.6 Mb/d from the same period in 2015. This implies a 2016YTD net decline in total OECD demand of 0.4 Mb/d.
- World crude oil supplies, according to EIA data, have declined 1.3 Mb/d from December-15 to June-16, ref figures 1 and 2.
- The above implies that non OECD crude oil consumption/demand has declined about 1 Mb/d since December 2015.
This while the oil price [Brent Spot] averaged about $40/b.
This may now have (mainly) 2 explanations;
- The present EIA data for crude oil for the recent months under reports actual world crude oil supply, thus the supply data for 2016 should be expected to be subject to upward revisions in the future.
- Consumption/demand in some non OECD regions/countries are in decline and this with an oil price below $50/b.
If this should be the case, then it needs a lot of attention as it may be a vital sign of undertows driving world oil demand.
Oil is priced in US$ and US monetary policies (the FED) affect the exchange rate for other countries that in addition have a portion of their debts denominated in US$ thus their oil consumption is also subject to the ebb and flows from exchange rate changes.
YTD 2016, only OPEC has shown growth in crude oil supplies relative to 2015.
Unit costs ($/b) to bring new oil supplies to the market is on a general upward trajectory while the consumers’ affordability threshold may be in general decline.
As analysts and pundits keep staring into their crystal balls searching for clues to future moves in the oil price, it may be more helpful to look at some actual developments that may explain the recent strong US stock builds, developments in US total petroleum consumption and what this now may presage about future oil price movements.
In this post I present a closer look at the recent growth in US total petroleum demands split into:
- Development in US total petroleum consumption (inclusive some selected products)
- Rate of stock build of US commercial crude oil stocks
Then a look at developments in crude oil supplies from OPEC where several of the big oil producers in the Middle East have had strong growth in the number of oil rigs since early 2014. Recent media reports about increases in oil supplies from the biggest Middle East oil producer.In Q1 2014 the average daily US stock build was 0.29 Mb/d and during Q1 2015 the average US daily stock build was 1.10 Mb/d.
Demand for US stock build was up 0.8 Mb/d year over year. This stronger stock build temporarily adds to (global) demand and supports the oil price.
What drives this strong stock build is the price spread between contracts for prompt/front month deliveries versus contracts for later deliveries when the futures curve is in what is referred to as contango, refer also figure 3.
The recent strong builds in US crude oil storage may give away some clues about underlying developments in consumption.
Demand = Consumption + Stock changes = Supplies