OPEC's Claim To Eliminate The Oil Glut By June Unsupported By Data

Robert Boslego - INO.com Contributor - Energies

OPEC reported in its January Monthly Oil Market Report (MOMR) that OECD commercial stocks fell to 2.993 billion barrels, around 271 million barrels above the latest five-year average. Saudi Arabia's energy minister, Khalid Al-Falih, stated last week that production cuts by OPEC and non-OPEC countries may reduce global oil inventories to the five-year average by June thereby rendering a continuation of the cuts unnecessary.

But three closely-watched sources of energy data do not support such a drop in global oil inventories. The Energy Information Administration (EIA), the International Energy Agency (IEA) and OPEC itself published their monthly reports in January, attempting to include impacts of the production cuts. Two of the sources, EIA and OPEC, provide data that show (or imply) stock builds over the first half, and the IEA data show a drawdown but not of the magnitude suggested by Mr. Al-Fahil. Continue reading "OPEC's Claim To Eliminate The Oil Glut By June Unsupported By Data"

World Oil Supply-Demand Balance in 2017 Depends on Limited OPEC Production Increase

Robert Boslego - INO.com Contributor - Energies

The Energy Information Administration (EIA) recently released its September Short-Term Energy Outlook (STEO) and its projects that world supply and demand will finally balance by late 2017. However, that depends on OPEC production rising a very small amount.

Base Case Scenario

Specifically, the EIA reported that OPEC crude production averaged 32.7 million barrels per day (mmbd) in August, and it projects OPEC production to average 32.95 mmbd in 2017. Under that scenario, world supply meets demand of 97.8 million barrels per day, and total inventories end 2017 at 3.062 billion barrels, about 350 million barrels higher than normal.

OECD Commercial Oil Inventory

The 2017 demand figure represents a gain of 1.5% from estimated demand in 2016 of 95.88 mmbd, which is a gain of 1.6% over 2015. This assumes a healthy macroeconomic environment. For example, the EIA is projecting that US GDP gains 2.6% in 2017, much better than the 1.5% GDP gain EIA assumes in 2016. Continue reading "World Oil Supply-Demand Balance in 2017 Depends on Limited OPEC Production Increase"

5 Under-Appreciated Facts About Oil… Plus One Counter-Point

Adam Feik - INO.com Contributor - Energies

Recent data on oil prices and energy equities is painting a picture few seem to appreciate. Here are 5 under-appreciated nuggets of information that generally seem to favor a rebound in oil prices and oil companies’ stocks. At the end, I offer one significant counterpoint.

Fact #1: Growing demand: Media outlets seem to continue wondering whether global demand for oil has increased with today’s lower prices. The answer, of course, is a definite yes.

I listened a couple weeks ago to a presentation by a portfolio manager of the Guinness Atkinson Global Energy Fund (GAGEX), Jonathan Waghorn (who co-manages the fund along with Tim Guinness and Will Riley). I’ll reference information and charts from Mr. Waghorn’s presentation throughout this article. Continue reading "5 Under-Appreciated Facts About Oil… Plus One Counter-Point"