OPEC’s Oil Production Slightly Increased in May

According to the latest June report published by the Organization of the Petroleum Exporting Countries referring to the latest developments in the crude oil market during May, OPEC’s oil production slightly rose during the month compared with April’s oil production.

OPEC’s crude oil production slightly rose to 30,567 thousand bbl/d in May compared with 30,462 thousand bbl/d in April. This means the total OPEC oil supply slightly increased by 105.4 thousand during the previous month. Saudi Arabia‘s oil production rose by 143.4 thousand bbl/d to 9,367 thousand bbl/d. Iran’s oil production remained stable at 2,644 thousand, which is around 11% below the average production levels in 2012 and 27% below the production in 2011.

The rest of OPEC countries remained virtually unchanged their oil quotas during May 2013.

The oil supply of non-OPEC countries was revised upwards to an estimate of 53.96 million bbl/d in 2013, a rise of 0.98 million bbl/d compared with 2012’s oil supply.

Assuming that OPEC’s supply will remain flat in 2013 at the same quota as in the first five month of the year at 30.3 million bbl/d and adding to that OPEC’s NGL’s and non-conventional oil at an estimate of 5.87 the total global supply will reach in 2013 an estimate of 90.13 million bbl/d. 

The total world oil demand forecast for 2013 is estimated to be 89.65 million bbl/d – a growth of 0.78 million bbl/d or less than 1% compared with 2012’s demand.

The estimated gap between supply and demand on a global will reach during 2013 a total of 0.48 million bbl/d (i.e. a surplus of 480 thousand barrels), which is lower than last month’s estimated gap. Therefore, if the difference between the supply and the demand with further contract it could suggest that the oil market with further tighten in the months to follow, which could pull up oil prices back to the 100s range.

Oil Stockpiles Rose by 12.8Mb

Based on the weekly update of the EIA, oil stockpiles increased by 12.8 MB and reached 1,823.9 million barrels. The linear correlation between the shifts in stockpiles remained stable at -0.188: this correlation suggests that oil price, assuming all things equal, will fall next week.

Oil imports to the U.S rose by 0.7% last week. The weekly developments in oil imports have a mid-strong negative correlation (-0.306) that implies oil prices may dwindle next week. Refinery inputs remained unchanged last week while oil production declined.

IEA Oil Monthly Update

According to the IEA, the non-OPEC countries’ oil supply growth is projected to reach 1.1 mb/d in 2013. In May, global supply reached 91.2 mb/d.

The global oil demand projection is expected to rise by 0.785 mbbl/d in 2013 compared with 2012’s demand.

In the report, the OECD industry oil inventories rose by 16.7 million bbl to 2,680 million bbl in April 2013. This means that the oil market is keep loosening in OECD countries; this was probably among the reasons for the sharp fall in premium of Brent oil over WTI in recent weeks.

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