OPEC Monthly Report: Production volume further down, demand forecast raised

The OPEC monthly Oil market report for December was published a few minutes ago. OPEC’s output dropped 134,000 barrels per day from October to November, and stands now at 32.45 million barrels per day. At least that’s what the data from external observers say. Like every month, the OPEC headquarters in Vienna seems to trust the externally collected data more than the reports of its own member countries.

Also, there are some deviations between externally collected and the original data of the producing countries. For example, according to allegedly more reliable external data, Nigeria is said to have increased its volume by 95,000 barrels per day within a month, and Angola is said to have cut by 108,000. Saudi Arabia, UAE and Venezuela are said to have all cut smaller quantities.

Venezuela has actually cut 118,000 barrels a day, according to its own data. Why? Because the conveyor systems are so broken that the supply volume had to be reduced? The Saudis have reportedly cut by 164,000 barrels. That would at least correspond to the official Saudi announcements at the OPEC conference in Vienna on November 30, where it was clearly stated that they were still willing to cut their supply volume more than they needed.

One might also think that OPEC has now noticeably further reduced its supply levels, as the US Shale Industry continues to increase their production, and now it tightly below the 10 million-barrel limit (per day). On November the OPEC only announced to extend stable cut levels from last year – from further shortening there was no question.

In addition to the own volume cuts, OPEC increases the own forecast for global oil demand. Growth in full-year 2017 is now expected to increase with 1.53 million barrels per day. Last Summer, the growth forecast was still at +1.15. For the next year, the forecast was still from this Summer at a demand growth volume of 1.26 million – now there are +1.51 million barrels per day estimated.

As the OPEC officials said recently in Vienna. In the future anyway, there will be a drastic increase in demand, as there should be more than enough cake left over for all producers. Pure Optimism? Important: Crude oil inventories in OECD countries now stand at 2.948 billion barrels. Thus, the mountain continues to shrink, and is now only 137 million barrels above the five-year average. According to this figure, OPEC is making progress with its policy.

As always, we would like to mention that we still have doubts as to whether the allegedly huge growth in demand can overshadow the steadily increasing production growth of US Shale. But we little ones at “fmn” are not high payed bank analysts…

Here more detailed Infos from OPEC in its own words:

World Oil Demand

Global oil demand is projected to grow at around 1.53 mb/d in 2017, in line with last month’s forecast. China is projected to lead oil demand growth in the non-OECD, followed by Other Asia – which includes India – and OECD Americas. In 2018, world oil demand is expected to grow by 1.51 mb/d. OECD will contribute positively to oil demand growth, adding some 0.28 mb/d, whereas the bulk of the growth will come from the non-OECD with 1.23 mb/d of potential growth.

World Oil Supply

Non-OPEC oil supply growth for 2017 now stands at 0.81 mb/d, representing an upward revision of
0.15 mb/d from the previous report. For 2018, the forecast for non-OPEC supply growth has been revised up by 0.12 mb/d to now stand at 0.99 mb/d. The 2018 forecast for non-OPEC supply is associated with considerable uncertainties, particularly regarding US tight oil developments. US oil supply is now expected to grow by 1.05 mb/d next year, representing an upward revision of 0.18 mb/d and following growth of 0.61 mb/d in 2017. OPEC NGLs and non-conventional liquids are expected to increase by 0.18 mb/d in 2018, compared to 0.17 mb/d this year. In November, OPEC crude production decreased by 133 tb/d, according to secondary sources, to average 32.45 mb/d.

Stock Movements

Total OECD commercial oil stocks fell in October to stand at 2,948 mb. At this level, OECD commercial oil stocks are 137 mb above the latest five-year average. Crude and products stocks indicate a surplus of around 110 mb and 27 mb above the seasonal norm, respectively. In terms of days of forward cover, OECD commercial stocks stand at 62.1 days in October, some 1.8 days higher than the latest five-year average.

Balance of Supply and Demand

Based on the current global oil supply/demand balance, OPEC crude in 2017 is estimated to stand at
32.8 mb/d, some 0.6 mb/d higher than the 2016 level. In 2018, OPEC crude is forecast at 33.2 mb/d, an
increase of 0.3 mb/d over the 2017 level.

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