World total liquids bounced by a further 790,000 bpd in July partly on the back of continued recovery in Canada. Total liquids now stand at 97.01 Mbpd, down a meagre 70,000 bpd since July 2015.
The oil price staged a modest cyclical rally in August to close at $48.5 (Brent) on August 19th. Robust production from OPEC and Russia combined with large inventories hanging over the market makes me inclined to agree with Art Berman who speculates that prices will remain range bound between $38 and $52 in the near term.
The following totals compare July 2016 with June 2016. In brackets the change year on year:
- World Total Liquids +790,000 bpd (-70,000 YOY)
- USA -140,000 bpd (-520,000)
- North America +360,000 bpd (-870,000)
- Canada +540,000 bpd (-210,000)
- OPEC +140,000 bpd (+630,000)
- Saudi Arabia +120,000 bpd (+240,000)
- Iran -20,000 bpd (+730,000)
- Russia + FSU -20,000 bpd (+130,000)
- (Europe -150,000 bpd (YOY))
- Asia -70,000 (-410,000)
Year on Year, OPEC and Russia are the big winners. North America, Europe and Asia the big losers. And on the drilling front:
- US oil rig count up 90 to 406 from the low of 27 May
- International rigs up 3 since last month
This article first appeared on Energy Matters.
Figure 1 The near term peak in the oil price (WTI and Brent) was on the 8th of June at $51. Since then the price has fallen and then rallied to $48.5 on August 19th. A break above $51 would be bullish for price but it is difficult to find fundamental reasons for the rally to continue at this time. Art Berman is of the opinion that prices will remain stuck in the range $38 to $52 and I tend to agree. Notably my forecast for December 2016 was $37 / bbl of Brent.
Figure 2 Brent is up $4.64 since 22 July 2016 and down $2.47 since 22 July 2015.
Figure 3 Not updated since March.
Figure 4 The rally in US drilling is beginning to look rather limp. Oil directed rigs are up 90 to 406 on 26 August from the low of 316 on 27 May. But there was no increase in the last week. The count is down 269 from one year ago.
Figure 5 Total US rigs are up 85 to 489 from the near term low of 404 seen on 27 May 2016.
Figure 6 The near-term peak in US production was 13.24 Mbpd in April 2015. The July 2016 figure was 12.38 Mbpd, down 860,000 bpd from that peak and down a significant 140,000 bpd from last month that once again, in part, reflects data revisions to last month’s figure. Year on year US production is down 520,000 bpd.
Figure 7 OPEC production has pricked the horizontal trend line and has set a near term record (I’m not sure if this is an all time record). This reflects gains in Saudi Arabia and Iran while Libya remains largely off line. OPEC up 140,000 since last month and up 630,000 year on year.
Figure 8 OPEC spare production capacity continues to slide and now stands at 2.41 Mbpd. Only Saudi Arabia and Libya are now deemed to hold significant spare capacity. Spare capacity is down 800,000 bpd year on year. Slender spare capacity is a bullish signal going forward but will only come into play once the market has rebalanced and inventories are depleted.
Figure 9 Saudi Arabia continues to flex its production muscles. Production was up 120,000 bpd in July and up 240,000 bpd year on year.
Figure 10 Iran produced 3.6 Mbpd in July, down 20,000 bpd on the previous month. Iran’s production has been constant for three months and now appears to be back at capacity following the lifting of sanctions. Iran’s production is up 730,000 bpd year on year.
Figure 11 ME OPEC rigs were up 5 to 153 in July.
Figure 12 The international oil rig count was up 3 to 680 in July.
Figure 13 Russia + other FSU down 20,000 bpd since June to 14.06 Mbpd. Up 130,000 bpd year on year.
Figure 14 The cycles in European production data are down to summer maintenance programs in the offshore North Sea province. Group production is down 150,000 bpd year on year to 3.29 Mbpd.
- Norway July 2015 = 1.96 Mbpd; July 2016 = 1.90 Mbpd; down 60,000 bpd YOY
- UK July 2015 = 0.93 Mbpd; July 2016 = 0.97 Mbpd; up 40,000 bpd YOY
- Other July 2015 = 0.55 Mbpd; July 2016 = 0.42 Mbpd; down 130,000 bpd YOY
Figure 15 Group production down 70,000 bpd to 7.49 Mbpd. Down 450,000 bpd year on year.
Figure 16 The N America group has bounced again in July as Canadian production continues to recover from the Fort McMurray wild fire. Group production is up 360,000 bpd since June to 19.13 Mbpd. Down 870,000 bpd year on year.
Figure 17 Total liquids = crude oil + condensate + natural gas liquids + refinery gains + biofuel. Production is up 790,000 bpd since June. Down 70,000 bpd year on year.
Figure 18 Stock change = global total liquids production less demand. 2Q figures are impacted by -620,000 bpd in Canada in May, resulting from the Fort McMurray wild fire. But the market is heading back towards balance with forces driving different parts of the market in different directions.
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