Wednesday, November 9, 2011

OPEC Says Oil Production Up in Oct (Sort Of)

The OPEC monthly report is out and says that
Preliminary figures indicate that global oil supply increased 0.87 mb/d in October to
average 88.35 mb/d. Non-OPEC supply experienced growth of 0.86 mb/d, while OPEC
crude production remained relatively flat.
However, it's worth noting that last month they said
Preliminary figures show that global oil supply averaged 88.50 mb/d in September, a
gain of 0.76 mb/d from the previous month, supported by estimated increases in non-OPEC supply.
So in other words although they now show production increasing from September to October, they revised down September by more than the inter-month gain, thus coming up with a final number that is a little less than last month's number.

Still I suppose we'd have to say that global oil production still seems to be on an uptrend. The IEA will report tomorrow, so we can potentially revise our opinions then.


Joe said...

I would think that oil production, at a peak and in a cartel, would naturally undulate, if only because of imperfect information between the parties and the nature of incremental additions to production.

A teacher told me when he was growing up, his farmer father would always plant what was abundant and low priced last year, because all of his neighbors would switch over to what was scarce and expensive the last year. Thus, OPEC may be operating on a theory of, "Since my neighbor and I both dropped production last month/quarter, I can increase my production and capture a little extra at higher prices," only to be met with other countries doing the same. And then everyone decides, simultaneously, to shut off the damaging/expensive/less profitable wells, because everyone else is producing at the same time.

Incremental additions: I would expect that at or near peak production, gains come in small jumps which slowly peter out, rather than in big jumps which can be turned off and on at will, by relying on natural pressure. Jump, decline, jump, decline: if there are enough countries doing this, it would be smooth as the number of jumps filters out the shock from each; but as the number of jumps decreases, the impact of each individual jump is felt more strongly in isolation.

I see some lagged response to the loss of Libya in the figures, but the drop from August highs through September and October suggests that OPEC was unable/unwilling to sustain this full increase.

OPEC seems to say that they are going to cap production at 30mb/d for this year and next, and that economic growth will exceed oil demand growth by a factor of four. Let's see in March if production is still within 200kb/d of 30mb/d, without Libya. I would guess not.

kjmclark said...

IEA's World Energy Outlook is out today. Thankfully, they're still beating the "end of cheap oil" drum, and calling for an end to subsidies for fossil fuels. It sure did help when they actually looked at field-by-field conditions. Too bad they're now being ignored for their inconvenient message.

kjmclark said...

WRT a prior question, I just got two crop production reports from USDA. They're both about Michigan production, but they both cite national production info too. Interestingly, they list both planted acres and harvested acres. So somewhere, USDA has planted acres available. For 2009 nationally, USDA reports the corn yield as 164.7 bushels per acre, which as I've noted, is just production divided by harvested acres. However, the harvest on planted acres is lower, at 151.6 bushels per acre.

They list 2009, 2010, and 2011. The yields are (all numbers are national, corn, bu/ac):
Reported yield: 164.7
Yield on planted acres: 151.6
Reported yield: 152.8
Yield on planted acres: 141.1
Reported yield: 146.7
Yield on planted acres: 134.0

Acres planted and harvested is going up though:
Planted: 86,382,000
Harvested: 79,490,000
Planted: 88,192,000
Harvested: 81,446,000
Planted: 91,897,000
Harvested: 83,936,000

But production has declined two years in a row (bushels):
2009 13,091,826,000
2010 12,446,865,000
2011 12,309,936,000

All from USDA report NR-11-81