World Oil Supply And Price Outlook, July 2019

The Energy Information Administration released its Short-Term Energy Outlook for July, and it shows that OECD oil inventories likely bottomed last June 2018 at 2.805 billion barrels. It estimated stocks dipped by 4 million barrels in June 2019 to 2.902 billion, 97 million barrels higher than a year ago.

However, throughout 2019, OECD inventories are no longer expected to rise any further, on balance. At year-end, EIA projects 2019 to be with 2.899 million barrels, 37 million more than at the end of 2018. For 2020, EIA projects that stocks will build 35 million barrels to end the year at 2.934 billion.

oecd oil inventories

The EIA has revised its estimates for future OPEC production down significantly, given the sanctions on both Iran and Venezuela. For much of the balance of 2019 and 2020, it expects OPEC production to remain under 30 million barrels per day. June was reported at 29.8 mmbd.

OPEC has revised its call (demand) for OPEC oil. For 2020, the average is 29.2 mmbd. Therefore, OPEC must cut supply by another 550,000 b/d from June next year just to balance stocks. Continue reading "World Oil Supply And Price Outlook, July 2019"

U.S. Crude Production Surges In April

The Energy Information Administration reported that April crude oil production averaged 12.162 million barrels per day (mmbd), up 257,000 b/d from March. The rise resulted from a 107,000 b/d increase in Texas, a 77,000 b/d increase in the Gulf of Mexico (GOM), a 32,000 b/d increase in Oklahoma, a 14,000 b/d increase in Colorado, and a 13,000 b/d increase in Wyoming.

Crude Production

A pause in the growth rate in Texas had been expected due to pipeline constraints, which are expected to be alleviated in the second half of 2019 and the first half of 2020. Nonetheless, crude production set yet another record high in April.

Crude Production

The year-over-year gains have been especially impressive with the April figure being 1.687 mmbd. And this number only includes crude oil. Other supplies (liquids) that are part of the petroleum supply add to that. For April, that additional gain is about 630,000 b/d. Continue reading "U.S. Crude Production Surges In April"

World Oil Supply And Price Outlook, June 2019

The Energy Information Administration released its Short-Term Energy Outlook for June, and it shows that OECD oil inventories likely bottomed last June 2018 at 2.804 billion barrels. It estimated stocks rose by 38 million barrels in May to 2.902 billion, 84 million barrels higher than a year ago.

However, throughout 2019, OECD inventories are no longer expected to rise any further. At year-end, EIA projects 2019 to be with 2.871 million barrels, 10 million more than at the end of 2018. For 2020, EIA projects that stocks will build 49 million barrels to end the year at 2.920 billion.

oecd oil inventories

The EIA has revised its estimates for future OPEC production down significantly, given the sanctions on both Iran and Venezuela. For much of the balance of 2019 and 2020, it expects OPEC production to remain under 30 million barrels per day. U.S. shale is expected to capture market share from OPEC. Continue reading "World Oil Supply And Price Outlook, June 2019"

U.S. Crude Production Rebounds In March

The Energy Information Administration reported that March crude oil production averaged 11.905 million barrels per day (mmbd), up 241,000 b/d from February. The rise was largely the result of the resumption of output from the Gulf of Mexico (GOM) which had been affected by unscheduled maintenance. Production rose by 191,000 b/d.

Crude Production

Elsewhere, there were gains of 42,000 b/d in North Dakota, 23,000 b/d in New Mexico and 16,000 b/d in Oklahoma. There was a decline of 17,000 b/d in Colorado and 5,000 b/d in Texas. A pause in the growth rate in Texas had been expected due to pipeline constraints which are expected to be alleviated in the second half of 2019. Nonetheless, crude production rose by a spectacular 1.441 mmbd from June through March. Continue reading "U.S. Crude Production Rebounds In March"

World Oil Supply And Price Outlook, May 2019

The Energy Information Administration released its Short-Term Energy Outlook for May, and it shows that OECD oil inventories likely bottomed last June at 2.806 billion barrels. It estimated that stocks rose by 20 million barrels in April to 2.860 billion, 51 million barrels higher than a year ago.

Throughout the balance of 2019, OECD inventories are expected to rise modestly. At year-end, EIA projects stocks at 2.870 million barrels, 11 million more than at the end of 2018.

For 2020, EIA projects that stocks will build another 35 million barrels to end the year at 2.905 billion. The non-extension of waivers to Iran’s sanctions implies lower OPEC output for the period, and this factor has lowered the EIA’s stock forecast materially.

oecd oil inventories

Oil Price Implications

I updated my linear regression between OECD oil inventories and WTI crude oil prices for the period 2010 through 2018. As expected, there are periods where the price deviates greatly from the regression model. But overall, the model provides a reasonably high r-square result of 80 percent. Continue reading "World Oil Supply And Price Outlook, May 2019"