Oil Production Vital Statistics December 2015

The oil just keeps on gushing. All of the main producing regions posted gains in November. As expected, the oil price tested lows on the right shoulder of the head and shoulders pattern and carried on down this month heading for lows last seen in December 2008. Back then OPEC slashed production providing strong support for price. I don’t see that happening soon and therefore my prognosis remains that $20 (the deflated low from 1999) is required to elevate the pain levels to that required to shut off surplus supply. News that the USA may resume oil exports closed the WTI-Brent spread.

      • World total liquids production up 50,000 bpd to 96.85 Mbpd.
      • OPEC production up 50,000 bpd to 31.73 Mbpd (C+C)
      • N America production up 280,000 bpd to 19.90 Mbpd.
      • Russia and FSU up 150,000 bpd to 14.09 Mbpd
      • Europe up 20,000 bpd to 3.44 Mbpd (compared with November 2014)
      • Asia up 60,000 bpd to 7.91 Mbpd.
      • Middle East rig count is rising. The international oil rig count is falling slowly. The US oil rig count is falling.
      • Note that the differences noted above do not tally with the global figure because of the pattern of data revisions. But the trend is not down.

This article first appeared on Energy Matters.

Figure 1 The oil price has continued to trend down through December passing through support at $40. It is still possible from a chart perspective that the oil price gets support at around current levels ($37 as I write). But from a fundamental supply demand perspective there is no reason for that support to be given.

EIA oil price and Baker Hughes rig count charts are updated to the end of December 2015, the remaining oil production charts are updated to November 2015 using the IEA OMR data.

Figure 2 The bigger picture shows that the oil price is now approaching the lows set in December 2008. The price could get support at this level, but fundamentally there seems no reason for this to occur.

Figure 3 News that the USA may resume oil exports closed the WTI – Brent spread. This has happened on a number of occasions in the last two years and it remains to be seen if the normal WTI premium becomes re-established. 

Figure 4 The fall in US oil and gas rig count is once again accelerating. The blip represents 675 rigs on 28 August and has since fallen to 538 oil rigs on 23rd December, a fall of 137 rigs in 18 weeks. 538 rigs still drilling, used to drill better wells in sweet spots, is sufficient to substantially offset declines which is why US production is trending down only slowly.

Figure 5 This expanded scale shows that the rate of decline in US oil directed drilling is muted compared with the big drop seen earlier this year. On 18 December, 10 rigs were re-classified from gas to oil. This has the effect of slowing the decline in oil rigs and accelerating the decline in gas. On 23 Dec the total rig count was 7oo compared with a post-crash low of 876 seen on 20 June 2009.

Figure 6 The near-term peak in US production was 13.24 Mbpd in April 2015.  The November figure was 12.80 Mbpd, down 440,000 bpd from that peak. US oil production has been amazingly resilient in the face of the collapse in drilling. The effect of IEA revisions is to show that US production is falling only slowly. And reports of thousands of drilled but uncompleted wells may cause this situation to persist for many months.

Figure 7 OPEC production stands at 31.73 Mbpd up 50,000 bpd on October. This appears to define a plateau level in OPEC production. There has been very little action in the OPEC producers, all are managing to maintain production levels. Iran is waiting in the wings to introduce a further 730,000 bpd (IEA) when / if sanctions are lifted early 2016.

Figure 8 OPEC booked spare production capacity stands at 3.18 Mbpd with 2.07 in Saudi and 0.73 in Iran. Note how OPEC withheld over 4 Mbpd in the 2008 post-crash era that supported price, eventually sending it back over $100.

Figure 9 In October Saudi production fell by 20,000 bpd to 10.19 Mbpd which is effectively unchanged. NZ = neutral zone which is neutral territory that lies between Saudi Arabia and Kuwait where production from the Wafra heavy oil field is now effectively zero.

Figure 10 The ME OPEC oil rig count is on a rising trend with operational cycles superimposed. While the rest of the world has lost its appetite for drilling, it is business as usual for the ME OPEC countries.

Figure 11 The international oil rig count had been stable for 6 months but has started to inch down once more. The international rig count remains above the peak seen at the top of the 2008 price cycle. There are still a lot of rigs operational.

Figure 12 Russia and other FSU produced 14.09 Mbpd in November, up 150,000 bpd and little changed for 3 years. 

Figure 13 The cycles in European production data are down to summer maintenance programs in the offshore North Sea province. To get an idea of trend it is necessary to compare production with the same month a year ago. The dashed line shows that European production has been essentially flat for three years. The post-peak declines have been arrested. Compared with Nov 2014, European production is up 20,000 bpd to 3.44 Mbpd.

      • Norway Nov 2014 = 1.94 Mbpd; Nov 2015 = 1.92 Mbpd; down 20,000 bpd YOY
      • UK Nov 2014 = 0.74 Mbpd; Nov 2015 = 0.99 Mbpd; up 250,000 bpd YOY
      • Other Nov 2014 = 0.74 Mbpd; Nov 2015 = 0.53 Mbpd; down 210,000 bpd YOY

Figure 14 This group of S and E Asian producers has been trending sideways since 2010.  The group produced 7.91 Mbpd in November, up 60,000 bpd on the revised October figure.

Figure 15 N American production looks like it topped in April at 20.12 Mbpd:

      • USA Oct 2015 12.76 Mbpd; Nov 2015 12.80 Mbpd; up 40,000 bpd
      • Canada Oct 2015 4.35 Mbpd; Nov 2015 4.5 Mbpd; up 150,000 bpd
      • Mexico Oct 2015 2.60 Mbpd; Nov 2015 2.60 Mbpd; unchanged

Group production up 280,000 bpd from October to 19.90 Mbpd in November. Group production down 220,000 bpd from the April peak.

Figure 16 Total liquids = crude oil + condensate + natural gas liquids + refinery gains + biofuel. November production was 96.85 Mbpd up 50,000 bpd on the revised October figure. With the October figure revised down, July 2015 remains the IEA total liquids peak at 97.08 Mbpd. November production is down 230,000 bpd from that peak. The most that can be said is that Global total liquids has stopped rising but there is as yet little sign of the fall in production that is required to restore balance to the market.

Concluding Comments

In my analysis of Oil Price Scenarios for 2016, momentum of supply was an overriding feature that I saw driving prices lower and keeping prices low throughout 2016. There is nothing in the data presented here for November 2015 to change that view. Saudi Arabia’s stance appears to be hardening making Capitulation unlikely for now. But the world remains a dangerous place and destabilising Events may happen any time. While attention is on Syria and refugees, it is perhaps time for Ukraine to re-enter the fray.

Previous Editions of Vital Statistics

January 2015
February 2015
March 2015
April 2015
May 2015
June 2015
July 2015
August 2015
September 2015

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8 Responses to Oil Production Vital Statistics December 2015

  1. Hugh Sharman says:

    Nick Butler seems to agree http://blogs.ft.com/nick-butler/2015/12/27/the-oil-price-in-2016-how-low-is-the-ceiling/

    But what a crazy way to price the World’s most important commodity! When will the ticking debt bomb under US shale production explode and what will the consequences of that be?

    Yes, of course, we don’t know! Welcome to 2016!

  2. Luís says:

    According to the EIA, petroleum extraction in the US fell from 9.6 Mb/d in April to 9.1 Mb/d in November – a decline of almost 5% in just 7 months. Would you like to comment on why are the numbers you chose so different?


    Another example is Russia. On a monthly basis, both the EIA and JODI set a peak last winter (just over 10 Mb/d); even if there has hardly been a decline, none of these databases show the growth you portray in your graphs.

    Best wishes for 2016.

    • Euan Mearns says:

      Would you like to comment on why are the numbers you chose so different?

      Luis, it is not a really a choice I have made but a question of my hand being forced by circumstances. Last time I checked, the EIA were several months behind – not exactly handy for up to the moment analysis.

      You know I inherited a lot of this data base from Rembrandt and Oil Watch Monthly. At the time Rembrandt was producing about 1 article per month – OWM. I am producing 2 to 3 articles per week. I spent about 5 hours on Monday updating spread sheets, charts and writing post. Managed to fit in a trip to see Star Wars (strong sense of de ja vu their 😉 too.

      The problem I have is that I stopped recording biofuels, processing gains and OPEC NGL and it is quite a task to go back and update this from the monthly OMRs. And so I’m wondering if you could help here? I have these data from Jan 2002 to July 2012. Where the numbers are subject to revisions I’m always using the 3 month lagged and revised number, i.e. The Sep 15 numbers I’m using are those published in the December 15 OMR. I’ll check to see if there is any other variables worth recording



      • Luís says:

        I am in the process of moving to another country; I start a new job next Monday. Right now I have little spare time and an uncertain internet connection. Towards the end of January I might be able to help.

        I trashed all the databases that included agricultural products back in 2010, when it become impossible to match the various figures. This is likely the best way to go in your case too.

        The EIA runs a 4 month lag on the global figures, but for most individual countries this lag is just 2 months.


  3. Skeboo says:

    Hi Euan,

    I really enjoy these monthly posts. About figure 16, could that chart be broken down by all the categories you list in the description (crude oil + condensate + natural gas liquids + refinery gains + biofuel)? Or would you know of an IEA Excel link which can show the breakdown (I had a look myself in the public section of the IEA OMR but did not find it)?

    • Euan Mearns says:

      The EIA make this easier to do but their data is just updated to June 2015


      Luis asks me about this every month and so I’ve asked him to compile the IEA data that are updated to November. Easy enough to get bio fuels and refinery gains from the IEA but not NGLs for non-OPEC.

      • Skeboo says:

        Thanks a lot for the link, i managed to create the chart i wanted until June 2015, i did not mind not having the last 5 months: http://imgur.com/m5T619j. I used the average 12 months for the yearly figure.

        Now, the last thing i would need is get an idea of the condensate proportion out of the total crude + lease condensate: considering the June figure for crude and lease condensate (80,116kb), would you know the lease condensate percentage (roughly speaking) and whether this percentage is trending up or down? I’d like to know the amount of pure crude oil so to speak.
        I have seen presentations showing the breakdown but the source indicated ‘non public data’.

  4. Pingback: Oil Production Vital Statistics January 2016 | Energy Matters

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