In the recent Organization of the Petroleum Exporting Countries report the OPEC oil production slightly inclined during August compared to July 2011; the report also predicts Libya will reach a production level of 1 million bbl/d within six months.
OPEC’s crude oil production slightly rose by 76 thousand bbl/d during August as it reached 29,920 thousand bbl/d compared with 29,844 thousand bbl/d in July. Libya’s oil production was still very low at 3 thousand bbl/d compared with an average of nearly 1.6 million bbl/d back in 2010. According to the OPEC report the Libyan oil production is expected to resume in the next few days and should reach 1 million bbl/d in within six months.
The main reason for the high production level still came from the high oil production of Saudi Arabia as it reached in August nearly 9.72 million bbl/d – its highest oil production quota in 2011. Nigeria slightly raised its oil production quota by 93 thousand bbl/d during August compared with July’s. The rest of OPEC countries nearly didn’t change their oil quotas during August or slightly lowered them.
The global oil supply averaged in August at 88.09 million bbl/d, which is roughly 0.69 million bbl/d increase compared with July’s average oil supply.
The oil supply of non-OPEC countries is estimated to reach 52.79 million bbl/d in 2011, an increase of 0.50 million bbl/d compared with 2010. This revised estimate is slightly lower than last month’s report. The countries with downward adjustment were UK, Azerbaijan and Argentina. North America is expected to have the highest growth in oil production among non-OPEC countries, followed by Latin America.
The expected worldwide crude oil demand growth has been revised down in the recent report by 0.15 million bbl/d at 1.1 million bbl/d. The global oil demand is estimated to grow in 2011 by 1.2 mbbl/d to an average of 87.99 million bbl/d. This decline was due to weaker than expected driving season in the US in the past couple of months and the sluggish economic performance in OECD countries.
OECD countries’ total oil demand is estimated to decline by 0.39% or 0.18 mbbl/d in 2011 to 45.97 mbbl/d, compared with 46.15 mbbl/d in 2010. This revised projection is lower than last month’s report.
These findings suggest that the global oil market seems to further loosen up with expected increases in oil supply on the one hand, and decreases in growth rate of crude oil demand on the other. If these findings represent the oil market well, this could mean that fundamentally, crude oil prices should decline.
For further reading:
- OPEC oil production rose by 0.5 million bbl/d -OPEC August report
- Oil prices Monthly outlook –September 2011