Oil Production Vital Statistics October 2016

It is becoming increasingly difficult to make sense of the global production figures in light of events and IEA revisions. The July 2016 global total liquids figure has been subject to a large upwards revision to 97.45 Mbpd, leaving it just 10,000 bpd short of the all time record set in November 2015 (see chart). The figure recorded in August for July was 97.01 Mbpd, so it has been revised up by 440,000 bpd over the last 3 months.

The post-November 2015 production decline was accentuated by the Fort McMurray wild fire in Canada in May 2016. But overprinting all this is Iran coming back to full production with a YOY rise of 760,000 bpd combined with large rises in Saudi and Russian production.

The oil price is pressing on its $51 / bbl resistance. With OPEC spare capacity approaching lows and global production fast approaching balance, we can look forward to a rally in the oil price towards $65 / bbl (perhaps higher) some time in 2017.

The following totals compare September 2016 with September 2015:

  • World Total Liquids +530,000 bpd
  • OPEC +720,000
  • Russia + FSU +300,000
  • Europe -50,000 bpd
  • Asia -570,000
  • North America -690,000

The net figures from the above are +1.02 Mbpd and -1.31 Mbpd leaving a net -0.29 Mbpd decline that does not tally with the + 0.53 Mbpd global total liquids figure. The data I track does not capture all global production. But there is something rather strange going on with the data that merits investigation.

Year on Year, OPEC and Russia are the big winners. North America and Asia the big losers. And on the drilling front:

  • US total rig count up 163 to 567 from the low of 27 May
  • International rigs up 6 since last month

This article first appeared on Energy Matters.

EIA oil price and Baker Hughes rig count charts are updated to the end of October 2016, the remaining oil production charts are updated to September 2016 using the IEA OMR data.

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 towards resistance at $51 on two occasions. With rising bottoms, the chart beckons a break above $51 within months as the market marches relentlessly towards balance (see Figure 17).

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 total rig count rising for 19 consecutive weeks. Since the beginning of October, oil directed rigs are up 25 to 450 and gas directed rigs are up 21 to 117. The combined count is down 204 from one year ago.

Figure 4 Total US rigs are up 163 to 567 from the near term low of 404 seen on 27 May 2016.

Figure 5 The near-term peak in US production was 13.24 Mbpd in April 2015.  The September 2016 figure was 12.18 Mbpd, down 1.06 Mbpd from that peak and down a significant 80,000 bpd  from last month. The decline in US oil production appears to be accelerating. But accelerating decline will eventually be cancelled by the now rising drilling activity.

Figure 6 OPEC production, led by Saudi Arabia, continues to rise and set new records each month. Libya remains effectively off line. OPEC up 30,000 bpd since last month and up 720,000 bpd year on year.

Figure 7 OPEC spare production capacity continues to slide and now stands at 2.14 Mbpd. Only Saudi Arabia and Libya are now deemed to hold significant spare capacity.  Spare capacity is down 1.13 Mbpd 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 8 Saudi Arabia production was down 50,000 bpd in September but is up 400,000 bpd year on year.

Figure 9 Iran’s production has stabilised at just over 3.6 Mbpd. September was down 10,000 bpd on the previous month. The chart shows how spare capacity was converted to production and that the IEA showed great skill in estimating the former. Iran’s production is up 760,000 bpd year on year.

Figure 10 ME OPEC rigs were up 6 to 160 in Sep, one short of the 161 high point of March 2015.

Figure 11 The international oil rig count was up 6 to 684 in September. Europe, Africa and Asia lost rigs while the Middle East and Latin America gained rigs.

Figure 12 Russia + other FSU up 610,000 bpd since August to 14.22 Mbpd. Up 300,000 bpd year on year. These numbers look dodgy. August’s numbers were depressed contributing to the massive monthly rise. Expect these numbers to be significantly revised.

Figure 13 The cycles in European production data are down to summer maintenance programs in the offshore North Sea province. Group production is down 50,000 bpd year on year to 3.26 Mbpd.

Figure 14 Group production up 70,000 bpd to 7.39 Mbpd since last month. Down 570,000 bpd year on year. The plateau in this region’s production is well and truly bust, led by Chinese oil production decline.

Figure 15 Canada has all but recovered from the Fort McMurray wild fire.  Group production is down 230,000 bpd since August to 18.94 Mbpd. Down 690,000 bpd year on year.

Figure 16 Total liquids = crude oil + condensate + natural gas liquids + refinery gains + biofuel. Production is up 610,000 bpd since August. Up 530,000 bpd year on year.

Figure 17 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.

Previous Editions of Vital Statistics

January 2015
February 2015
March 2015
April 2015
May 2015
June 2015
July 2015
August 2015
September 2015
October 2015
November 2015
December 2015
January 2016
February 2016
March 2016
April 2016
May 2016
June 2016
July 2016
August 2016

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15 Responses to Oil Production Vital Statistics October 2016

  1. Last week, Shell’s CEO was said to expect peak oil demand in 5-15 years.
    Nick Butler expressed similar views in his Financial Times column, although he was more blunt and predicts the oil peak demand coming within 5 years (!).
    To me it seems clear that Butler can not be right, unless severe economic crisis are to hit Asia.
    https://twitter.com/AskjaEnergy/status/794533686578446337

    • Euan Mearns says:

      Peak oil demand will occur under two scenarios. 1) where there is a fresh price spike and folks can no longer afford it and a new super-depression ensues or 2) where a disruptive technology provides a cheaper alternative, e.g. syn-fuel made from very cheap electricity. I don’t see a combination of solar PV and all electric cars fitting either of these in the foreseeable future.

      • john eardley says:

        How about a third scenario where oil companies can no longer produce profit or borrow cheaply enough to replace reserves, and declining field output simply overwhelms their effors?

      • meliorismnow says:

        Those are possible scenarios but I think the more likely scenario is that central banks and government lose their credibility/control so that investors refuse to invest in long term, energy-heavy infrastructure projects. We see stagnant energy prices while a deflationary spiral takes hold (either fast or slow) with resource demand in the first world dropping faster than resources deplete globally.

        Oil is a particularly stark example, where per capita consumption has been in decline for decades. When the majority of first world households choose to no longer own a car (at least with an ICE) due to finances (choosing combinations of uber, metro, EVs, scooters, and biking/walking), demand for oil will drop considerably. It’s already the case in many cities (if not metro areas) but I feel likely to be the case overall inside a decade, particularly due to the deflationary spiral we’ve been delaying for decades.

      • Nathanael says:

        “I don’t see a combination of solar PV and all electric cars fitting either of these in the foreseeable future.”

        That’s ’cause you’re not looking. A combination of solar PV and electric cars is absolutely providing scenario 2 as we speak. You’ll look back in 5 years and see it. But you haven’t been spending your time watching those industries, so you’re not seeing it.

  2. Willem Post says:

    Euan,

    It would be useful to have a historic graph of production per rig.

    That would show fewer rigs support a given production at present than in the more distant past.

  3. Javier says:

    In one of his latest comments, Art Berman opens up the possibility that oil price is being manipulated by unaccounted-for oil in the US storage oil stocks. Very interesting stuff:

    http://www.artberman.com/u-s-storage-filling-up-with-unaccounted-for-oil/

  4. A C Osborn says:

    Off topic, Euan have you seen this method of generating Electricity?

    http://www.dailymail.co.uk/sciencetech/article-3912760/Britain-s-wave-farm-built-Cornwall-Site-provide-electricity-6-000-homes-year-2020.html

    It is going to initially cost £15M and £305/Mw.

    • Euan Mearns says:

      The trouble with estimated electricity costs is that you don’t know how these may fall with large-scale deployment. But the trouble with wave devices is that they are effectively wind devices so why deploy all that kit in salt water when a few, much cheaper, shore-based wind turbines might do the trick.

      Funding from EU regional development fund sounds like they are more interested in sending money to Cornwall than in generating affordable electricity.

      • A C Osborn says:

        Surely “Wave” is not as intermittent as Wind, is it?
        As the article states they have 2 of these operating in Aussieland, I wonder if any of your usual posters can find out any info on them?

  5. Climate Otter says:

    Apologies, off-topic- There is an article on China’s coal usage, indicating they are about to increase coal by 20% http://www.wsj.com/articles/china-doubles-down-on-coal-despite-climate-pledge-1478520063

    Knowing your site, I was curious to know if you might possible be covering that information in a new article?

    • PhilH says:

      As far as I can read from the teaser free intro, this relates to just coal capacity; what it doesn’t mention is utilisation. The capacity of other types of generation is called to increase by larger percentages. These, along with the growth in how much power is actually demanded, will determine how much further the recent falls in coal utilisation (load factor) will be. So it’s likely the amount of coal burned will be significantly less than a 20% increase on this year.

  6. Jeff says:

    Fig 10. – Will the ME OPEC producers increase their production or are they just offsetting decline/infill drilling etc.?

  7. Pingback: Oil Production Vital Statistics October 2016 | Energy News

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