Tuesday, April 12, 2011

IEA: March Oil Supply Down 0.7mbd

The IEA has released their summary of March oil supply.  The key point is this:
Global oil output fell 0.7 mb/d to 88.3 mb/d in March on reduced Libyan crude supply. Non-OPEC production rose 0.2 mb/d to 53.3 mb/d, even as unrest and strikes in Yemen, Oman, Gabon and Ivory Coast shuts in an average 0.1 mb/d of crude in March and April. Non-OPEC 2010 supply is left at 52.8 mb/d, while stronger Canadian production lifts the outlook by 0.1 mb/d to 53.7 mb/d for 2011.

OPEC crude supply fell by 890 kb/d in March to 29.2 mb/d, on a near-70% drop in Libyan output. Effective OPEC spare capacity stands at 3.91 mb/d, with Saudi Arabia accounting for 3.2 mb/d. The ‘call on OPEC crude and stock change’ is cut by 0.4 mb/d for 1Q11 to 29.8 mb/d. The average ‘call’ for 2011 is also 29.8 mb/d, unchanged from 2010 but 0.6 mb/d above March OPEC production.
The sharp fall in OPEC output suggests that Saudi Arabia did little or nothing to compensate for the loss of Libyan output. So, as so often, we are left to wonder what the 3.2mb/d of supposed Saudi spare capacity really means if it's nowhere to be seen whenever the world actually needs it. It's sort of the unicorn of the oil world - the horn keeps getting longer in the telling, but we've never actually seen one.

Here's a slightly longer term graph, along with the price response in March (inflation adjusted WTI on the right scale):

You can see the sharp price response to the turn down in oil supply (which was otherwise increasing quite rapidly in recent months). Also note that neither graph is zero-scaled in order to better show recent fluctuations.

OPEC is supposed to be out with their MOMR today also, but it was not available at "press time".  Hopefully, I'll have some country specific graphs available later in the day, once it does come out.


Glenn said...

The price curve looks a lot like 2008 just before the crash. The production curve, less so. It would be interesting to see the two curves over the period of the last decade.


Stuart Staniford said...

Glenn: the second graph goes back to the beginning of 2002, so you're only nine months short of a decade there.

Kenneth D. Worth said...

It is interesting that we are now getting the exact same comments out of the Gulf State oil ministers that we got in 2008. "$80-90 is a fair price. That is the optimal price. However, speculation is driving the price too high."

It's kind of scary that the recession in the OECD which began in 2007 was not enough to stop the price increases in 2008 due to developing world demand increases. A total meltdown was required.

Interesting times.

Mr. Sunshine said...

Stuart ... while the Wahhabi Unicorn is a mythical beast, my girlfriend, a cocktail waitress in Vail, assures me there is always a glut of horny Saudis :)

Emil said...

That's interesting, IEA says OPEC 'spare capacity' is almost 4 mb/d.

Goldman Sachs has said it's below 2 mb/d for some time now.

I wonder who's right - and given IEA's pathetic track record, I can't say it feels like the odds are in favour of the IEA.

Unknown said...

I don't get it. The graph says OPEC and average output are still rising in march. So OPEC said it's output is rising while IEA said global output falls.

Stuart Staniford said...


If you look carefully, you'll see that neither OPEC nor the average have a point for March. The OPEC MOMR came out later yesterday and I'll post a revised graph in today's post.

Unknown said...

Ok I see. Thanks. And interesting blog by the way! Go on!