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OPEC numbers confirm Saudi ramp up; EIA now sees markets balanced

 
11.09.2013

OPEC published its Monthly Oil Market Report (MOMR) yesterday, with few changes to the forecast figures. Based on the MOMR supply/demand data, we estimate a net supply surplus of 0.4mmb/d in 2013 and 0.6mmb/d in 2014 (both unchanged from last month’s forecast), after assuming prospective OPEC crude production remains at the August production level.

Oil demand was raised 25kb/d MoM for 2013 and 2014 as a result of higher than expected actual results in 1H13 and positive signs of improvement in some major OECD economies. Non-OPEC oil supply in 2013 was raised 70kb/d MoM on account of upwardly revised expectations for North American production and the Sudans. A 135kb/d uptick in non-OPEC supply in 2014 mainly reflects the previous year’s revisions carried forward.

The MOMR has OPEC production in August, based on secondary sources, dropping 0.1mmb/d MoM to 30.2mmb/d as a 0.5mmb/d drop in Libyan production was mostly offset by increased Saudi (+0.2mmb/d) and Iraqi (+0.1mmb/d) volumes. Saudi production is a fraction below 10.0mmb/d, according to the MOMR.

The EIA also released its Short-Term Energy Outlook yesterday. It observed that the global oil market tightened in August as a result of increased unplanned production disruptions coinciding with peak summer demand, while that was exacerbated by increased geopolitical concerns over Syria.

The EIA has put through a number of revisions to its September STEO, resulting in a net supply surplus of 0.1mmb/d in 2013 and 2014 based on its own forecasts for OPEC crude production. Previously, the EIA had global oil markets in a 0.2mmb/d deficit for 2013 and a 0.3mmb/d surplus for 2014.

Non-OPEC supply has been adjusted up 0.3mmb/d in 2013 without clarifying where the production increase originates. However, the EIA estimates US production in August to have averaged 7.6mmb/d, the highest monthly rate since 1989. The agency has also increased its full year 2013 average production estimate for the US 0.1mmb/d to 7.5mmb/d and for 2014 by 0.2mmb/d to 8.4mmb/d, as compared with last month’s STEO.

The Syrian crisis has been seen by many commentators as a significant contributor to the rise in the Brent price since late August. The likelihood of a US-led attack has diminished somewhat with the Russian proposal that Syria place its chemical weapons stocks under international control and Syria’s reported acceptance of such a plan. However, we see the ongoing collapse in Libyan production as the main factor supporting the oil price. 

Colin Smith, Marc Jacouris
VTB Capital analysts

Tags:
OPEC, oil

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