USOI - OPEC Upate October 2023 And EIA International Energy Outlook 2023

2023-10-25 05:32:00 ET

Summary

• OPEC crude output was revised higher in August 2023 by 33 kb/d compared to last month’s report and July 2023 OPEC crude output was revised higher by 22 kb/d.
• There was a significant draw on World oil stocks in 2023Q3 of about 133 Mb, if OPEC estimates of World Supply and Demand for Oil are correct.
• From 2021 to 2022 the ratio of 4 liquid fuels (gasoline, diesel, jet fuel, and residual fuel) in barrels of oil equivalent to C+C produced was about 89%.

A guest post by D Coyne

The OPEC Monthly Oil Market Report (MOMR) for October 2023 was published recently. The last month reported in most of the OPEC charts that follow is September 2023 and output reported for OPEC nations is crude oil output in thousands of barrels per day (kb/d). In many of the OPEC charts that follow the blue line with markers is monthly output and the thin red line is the centered twelve month average (CTMA) output. The charts for the International Energy Outlook ((IEO)) will report crude plus condensate (C+C) output with annual output estimates up to 2035.

The IEO reference scenario has a sharp drop in OPEC output of 5.5 Mb/d from 2024 to 2026, an alternative scenario (OPEC-DC est) is presented which will be discussed after the OPEC part of the post.

OPEC crude output was revised higher in August 2023 by 33 kb/d compared to last month’s report and July 2023 OPEC crude output was revised higher by 22 kb/d. When the World was at its CTMA peak for C+C output in 2018, OPEC crude output was about 31300 kb/d and by September 2023 OPEC crude output had fallen to roughly 3545 kb/d below the CTMA peak in 2018.

Preliminary data indicates that global liquids production in September was 0.1 Mb/d less than last month and averaged 100.6 Mb/d. World liquids output increased about 2.9 Mb/d in the past 23 months (from 97.7 Mb/d in October 2021).

Preliminary August 2023 data sees total OECD commercial oil stocks down m-o-m by 11 Mb. At 2803 Mb, they were 82 Mb higher than the same time one year ago, but 117 Mb lower than the latest five-year average and 182 Mb below the 2015–2019 average. As World Oil stocks continue to fall the risk of an oil price spike will increase.

There was a significant draw on World oil stocks in 2023Q3 of about 133 Mb, if OPEC estimates of World Supply and Demand for Oil are correct. A continuation of OPEC cuts in 2023Q4 could lead to another 300 Mb of stock draw if OPEC estimates for oil supply and demand are correct in 2023Q4.

Now a quick discussion of the EIA’s IEO 2023. The IEO reference scenario for World C+C output has a sharp drop in crude output from 2024 to 2026 of about 3.3 Mb/d, but this is not reflected in their estimates for demand for the main liquid fuels (gasoline, diesel, jet fuel, and residual fuel). From 2021 to 2022 the ratio of these 4 liquid fuels in barrels of oil equivalent to C+C produced was about 89%, but the ratio jumps sharply from 2024 to 2026 as shown in the chart below to over 93%.

My alternative scenario (DC scen) for World C+C assumes the ratio of liquid transport fuel to C+C production rises gradually from 89% in 2022 to 91% in 2031 and then remains at that level until 2035 and assumes the quantity of liquids fuel demand is unchanged. My expectation is that after 2030 the demand for transportation fuel is likely to be lower than the EIA reference scenario, but I did not add that assumption to the DC scenario presented below. The OPEC-DC est presented in the second chart of the post simply subtracts the EIA’s IEO reference scenario for non-OPEC C+C output from the World C+C- DC scen presented in the chart below. I also expect that non-OPEC output may be slightly lower than the EIA has published in the IEO 2023 reference scenario and that OPEC C+C output will likely need to be about 30to 31 Mb/d from 2025 to 2030 in order for World C+C to match the DC scenario in the chart below.

Original Post

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

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