Global total liquids production hit yet another record high of 98.24 Mbpd in November led by OPEC and Russia! Libya’s drive to restore production is a significant factor with production up 280,000 bpd from recent lows. The US oil rig count has risen for 32 consecutive weeks and US oil production has stopped falling. Production from the North Sea and Asia are in decline as the past low price and drive to restore profitability works through the system.
The oil price has significantly broken above the $51 / bbl resistance and Brent is currently at $57. With OPEC + Russia due to decrease production from January first and to maintain lower plateau levels, combined with the relentless rise in demand, the oil price should rally from here, but not by much. The ceiling is set by the cost of new supply that currently resides with the N American LTO frackers. US production has halted its decline which is perhaps a sign of what is coming.
The following totals compare November 2016 with November 2015:
- World Total Liquids +780,000 bpd
- OPEC +950,000
- Russia + FSU +440,000
- Europe -170,000 bpd
- Asia -640,000
- North America -640,000
The net figures from the above are +1.39 Mbpd and -1.45 Mbpd leaving a net -0.06 Mbpd increase compared with the + 0.78 Mbpd global total liquids figure.
Year on Year, OPEC and Russia are the big winners. North America, Asia and Europe the big losers. And on the drilling front:
- US total rig count up 261 to 665 from the low of 27 May
- International rigs up 15 in November
This article first appeared on Energy Matters.
Figure 1 With Brent now trading on $57, the oil price has made a decisive break above the $51 resistance. OPEC + Russia production cuts should have been enacted on 1 Jan. But these may be partly undone by Libyan efforts to restore production to 1 Mbpd and global total liquids hitting a new record highs.
Figure 2 A significant break above the diagonal trend line should see a rally towards $65, sufficient to send the frackers back to work.
Figure 3 The rally in US drilling has been sustained with the oil rig count rising for 32 consecutive weeks. On 27 May 2016 the oil rig count stood at 316 and has since risen 213 to 529 rigs on 6 January.
Figure 4 The total US rig count is quite tightly correlated with oil price but with a +18 week time lag. $60 oil should see the total rig count recover to about 1000 units from current 665. But this level of drilling activity will eventually send US production up and the oil price down.
Figure 5 The near-term peak in US production was 13.24 Mbpd in April 2015. November production of 12.44 Mbpd was higher than October marking two months of US production rise.
Figure 6 OPEC production, led by Saudi Arabia, continues to rise and sets new records each month. October production is the datum to be used in monitoring agreed production cuts of 1.2 Mbpd. West Libya is striving to restore production that is up from 280,000 bpd in August to 580,000 bpd in November. OPEC up 240,000 bpd since last month and up 1.45 Mbpd year on year.
Figure 7 OPEC spare production capacity fell by 330,000 bpd in November as members opened the spigots. Most countries have close to zero spare capacity with only Saudi Arabia booking a significant 1.57 M bpd. Spare capacity has returned to levels that spurred the great price bull run of 2002 to 2008.
At this point I want to direct readers to a new feature on Energy Matters called Global Energy Graphed (the permanent link is up top). There you will find summary production charts for OPEC and individual country charts for each OPEC member state along with some commentary. This feature is at an early stage of development but the intention is to deliver most of the Vital Statistics in this format in future. The new system uses Google Sheets where data entered on the spread sheet automatically updates charts on Energy Matters. These new charts are live and interactive – hover the cursor over the chart and the underlying data will be displayed. This new system is about 10 times more time efficient than updating charts in XL before saving and then uploading to WordPress.
Figure 8 ME OPEC rigs have flat lined at 160 for 3 months on a cyclical high. The all-time high is 161 and so it seems likely this is the number of rigs available to these 4 countries.
Figure 9 The international oil rig count hit a new low of 666 in October but rose to 681 in November. This chart needs to be contrasted with the OPEC chart above.
Figure 10 Russia + other FSU unchanged at 14.51 Mbpd in November. Up 440,000 bpd year on year. Like OPEC, Russia + FSU have had the spigots wide open ahead of quota negotiations.
Figure 11 The cycles in European production data are down to summer maintenance programs in the offshore North Sea province. Group production is down 170,000 bpd year on year to 3.43 Mbpd. Signs are emerging that North Sea production is beginning to sag under the weight of low oil price and the drive to restore profitability.
Figure 12 Group production up 30,000 bpd to 7.22 Mbpd since last month. Down 640,000 bpd year on year. The plateau in this region’s production is well and truly bust, led by Chinese oil production decline.
Figure 13 Canada has all but recovered from the Fort McMurray wild fire. Group production is up 120,000 bpd since October to 19.40 Mbpd. Down 640,000 bpd year on year. The fall in US and N America production has stalled.
Figure 14 Total liquids = crude oil + condensate + natural gas liquids + refinery gains + biofuel. Production is up 130,000 bpd since October. Up 780,000 bpd year on year hitting a new record high.
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