A guest post by D Coyne
The OPEC Monthly Oil Market Report (MOMR) for May 2022 was published last week. The last month reported in each of the charts that follow is April 2022 and output reported for OPEC nations is crude oil output in thousands of barrels per day (kb/d). In most of the charts that follow the blue line is monthly output and the red line is the centered twelve-month average (CTMA) output.
OPEC output increased by 153 kb/d according to secondary sources in April 2022. March 2022 output was revised down by 62 kb/d from what was reported last month, and February 2022 output was revised down by 1 kb/d compared to the April 2022 MOMR. Most of the increase in OPEC output was from Saudi Arabia (127 kb/d) and Iraq (103 kb/d). Eight OPEC members saw increases of 36 kb/d or less (total of 119 kb/d combined output for that group of 8 nations). Three OPEC nations had lower output in April, Libya (-116 kb/d) had the largest decrease in output and the other two nations with lower output in April had a combined decrease of 32 kb/d.
In the chart below, OPEC 13 crude and Russian C+C are shown. I expect that OPEC 13 crude plus Russian C + C are unlikely to return to the near-term peak of 35,216 kb/d reached in Feb 2022 in the next 12 months. Any future increase for OPEC 13 will likely be small (less than 100 kb/d) and will be more than offset by decreases in Russian C+C output over the next 12 months. It also seems unlikely that we will see increased output from Iran in the near future as the JCPOA negotiations are stalled.
World liquids output was down to 98.7 Mb/d in April from 99.7 Mb/d in March.
In figure 5, we see that in 2021 there was a stock draw of 4.41 Mb/d which would amount to a total annual stock draw of 1609 million barrels in 2021. When we consider supply/demand balance in 2022 (figure 6), note that OPEC capacity is likely 28.7 Mb/d or less. For 2022 Q2, the "call on OPEC" is supposedly 28 Mb/d, but note the output assumed in Figure 7 for both the US and Russia, neither estimate is very realistic. Russian liquids output in April was about 10.3 Mb/d and it seems unlikely that the 10.68 Mb/d Russian liquids output assumed by OPEC for 2022 Q2 will be realized (it is more likely that Russian output will fall even more going forward). Likewise, for the US, an increase of 720 kb/d is assumed from 2022 Q1 to 2022 Q2, US output will likely not increase to this extent in quarter 2 of 2022. The story is much the same for the second half of 2022 and even if the optimistic estimates of non-OPEC output were met in 2022 Q3 and Q4 OPEC is unlikely to be able to match the call on OPEC.
The fall in stocks that was seen in 2021 is likely to continue from April to December 2022, unless a severe recession cuts World demand for oil. Current OECD stocks are about 300 million barrels below both the 2017-2021 average level and the 2015-2019 average OECD stock level. I foresee high oil prices for the next 7 months and probably longer.
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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