According to the Kuwait News Agency, Kuwait Oil Minister Essam Abdul Mohsen Al-Marzouq, chairman of the Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC), has stated that February compliance by OPEC was 140%. But according to the figures that OPEC members submitted to the organization, compliance was just 42 percent, relative to the total OPEC ceiling (32.5) in the November 30th Agreement. If those figures are correct, this Agreement is in serious trouble.
Indonesia had been an OPEC member, and its volume (about 750,000 b/d) was included in the ceiling. But it dropped out, and so the new effective ceiling became 31.750 million barrels per day.
In the Agreement, the members chose to use “secondary sources” of their crude production to assess compliance. The idea was to have a more objective measure so individual members could not cheat by submitting low figures to make it seem as if they are complying. Continue reading "OPEC February Compliance 42%"→
U.S. oil inventories have increased by 20 million barrels since OPEC’s cut went into effect. Preliminary estimates of imports from OPEC members reveal an increase in the four-week trend of 77,000 b/d thus far in January from end-December. The largest increase, 148,000 b/d, was from Saudi Arabia.
I also observed that Saudi Arabia and Russia have masqueraded seasonal declines as their cuts. The Saudi cut of 486,000 b/d is a typical decline from production in the summer, when its domestic demand peaks. This year, instead of reducing its production after the summer, as it normally does, it waited until the OPEC meeting. (The graph below shows the seasonal decline in production from summer peak to the autumn in each year.) Continue reading "Why U.S. Crude Imports Might Not Drop Despite OPEC's Cuts"→
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"→
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