CRAK - OPEC Update December 2023
2023-12-21 04:25:00 ET
Summary
- The OPEC Monthly Oil Market Report for December 2023 was published recently.
- OPEC crude output was 27837 kb/d in November, output for October 2023 was revised lower by 5 kb/d compared to last month’s report and September 2023 OPEC crude output was revised higher by 17 kb/d.
- Liquids supply was 3.4 Mb/d higher than 23 months earlier, and OPEC crude output was 0.1 Mb/d less than 23 months earlier.
- OECD commercial stocks remain near the bottom of the 5-year range.
A guest post by D Coyne
The OPEC Monthly Oil Market Report (MOMR) for December 2023 was published recently. The last month reported in most of the OPEC charts that follow is November 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.
OPEC crude output was 27837 kb/d in November, output for October 2023 was revised lower by 5 kb/d compared to last month’s report and September 2023 OPEC crude output was revised higher by 17 kb/d. There were also revisions in quarterly and annual data from secondary sources compared to last month’s report . When the World was at its CTMA peak for C+C output in 2018, OPEC crude output was about 31300 kb/d, and by November 2023, OPEC crude output had fallen to 3463 kb/d below the OPEC output at the World C+C CTMA peak in 2018.
Preliminary data indicates that global liquids' production in November decreased by 0.4 mb/d to average 101.7 mb/d compared with the previous month. Liquids supply was 3.4 Mb/d higher than 23 months earlier, and OPEC crude output was 0.1 Mb/d less than 23 months earlier.
Preliminary October 2023 data show total OECD commercial oil stocks down by 12.8 mb, m-o-m. At 2,818 mb, they were 45 mb higher than the same time one year ago, but 66 mb lower than the latest five-year average and 128 mb below the 2015–2019 average. OECD commercial stocks remain near the bottom of the 5-year range.
OECD stocks appear quite low at about 88 days of forward supply, but note that the dark tanker fleet might result in more oil on water than reported here, though it is possible that tracking company data is used to fill in the oil on water estimated to exist in the dark fleet. There are also a lot of oil stocks in non-OECD nations (3700 to 4200 million barrels) that we do not have a clear picture on.
If OPEC estimates for World oil demand and non-OPEC output are correct and OPEC cuts output by as much as stated in the “voluntary” cuts recently announced, then there will be a strong draw in oil stocks over the next few quarters. So far in Quarter 3 of 2023, oil prices have been fairly subdued, so the market does not seem to think the OPEC demand estimates are correct, or the market believes that supply is higher than estimated by OPEC, the EIA and the IEA.
The chart above compares the World demand for liquids from the EIA’s Short Term Energy Outlook and the OPEC MOMR; there is a 1.5 to 2.5 Mb/d difference over most of the period from 2023Q3 to 2024Q4 with OPEC demand estimates higher. Based on announced cuts by OPEC, it seems they do not believe their demand forecast, or they think non-OPEC output is higher than they estimate.
OPEC has revised its US tight oil forecast a bit higher than last month by 30 kb/d in both 2023 and 2024.
The Permian tight oil estimate above uses Novi Labs data, Texas RRC data, New Mexico OCD data, and EIA 914 data to arrive at the Permian tight oil estimate. The Official EIA tight oil estimate for the Wolfcamp, Spraberry, and Bone Spring formations of the Permian Basin is presented for comparison. There are a number of formations missing from the EIA “official estimate” that are included at Novi Labs.
Only some of the difference between the estimates is explained by the missing formations in the EIA data set, about 200 kb/d of a 400 kb/d difference in March 2023. In September 2023, there is a 600 kb/d difference between my estimate and that of the EIA, some of this difference may be due to higher output from these other formations since March 2023, but I have no further information since the last post at Novi Labs on November 8, 2023. Often, the final few months of data at Novi Labs are incomplete, so I do not use the data beyond March 2023 from the most recent (November) post at Novi Labs.
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
For further details see:
OPEC Update, December 2023