Platts: OPEC Pumps 29.57 MMbpd in June

- Platts: OPEC Pumps 29.57 MMbpd in June

Friday, July 08, 2011
Platts

The Organization of the Petroleum Exporting Countries' (OPEC) pumped an average 29.57 million barrels per day (bpd) of crude oil in June, an increase of 530,000 barrels per day as Saudi Arabia, Kuwait and the United Arab Emirates (UAE) boosted production, a Platts survey of OPEC and oil industry officials and analysts showed July 8. In May, OPEC production was 29.04 million bpd.

Despite the sizable month-on-month increase, however, the June volume was lower than the 29.8 million bpd estimated for February, when the escalating unrest sweeping across North Africa and the Middle East was beginning to affect Libyan production. Increases totaling 760,000 bpd were partly offset by combined reductions of 230,000 bpd.

"These numbers show that OPEC still has a lot of work to do, because the world's economy is going into a period where demand rises, and the loss of Libyan output makes meeting that demand problematic," said John Kingston, director of news for Platts, a leading global energy, petrochemicals and metals information provider and publisher of this monthly survey report.

"What isn't certain is just how much of that hole will be filled by the release of oil from strategic stocks ordered by the International Energy Agency, and how much of the burden of supplying the market will be lifted from OPEC because of that action," Kingston said.

Saudi Arabia boosted output by 450,000 bpd to 9.5 million bpd in June, accounting for the biggest single volume increase. But participants in the survey said that not all of the increment would be exported because of higher demand from the domestic power generation sector.

Saudi production has been climbing in recent months in an attempt to compensate for lost volumes from Libya. The Saudis even created two "special" crude blends aimed at replicating the higher quality Libyan grades, although these failed to attract refiners.

At OPEC's June 8 meeting, Saudi Arabia pushed for a 1.5 million bpd output increase on top of estimated actual production of 28.8 million bpd. But Iran, which currently holds the OPEC presidency, Algeria, Angola, Ecuador, Libya and Venezuela opposed an increase and the talks broke up in disarray, leaving OPEC to issue a statement saying that "no formal decision was reached on a production agreement" and that the group would next meet on December 14 in Vienna.

The failure to reach a deal on production levels effectively renders the previous agreement, in place since January 2009 and which set a target of 24.845 million bpd for the 11 members bound by quotas, redundant.

Leaving the meeting, Saudi oil minister Ali Naimi said the kingdom and its Gulf neighbors would unilaterally boost production to ensure that markets were not left short of oil.

OPEC's own economists had forecast a big jump in demand for OPEC crude in the second half of the year, the Vienna secretariat's monthly oil market report for May projecting that the call on OPEC would rise by as much as two million bpd between the second and third quarters.

Two days after OPEC's acrimonious June 8 meeting, the secretariat published a new market report forecasting the call on OPEC crude at 30.9 million bpd in the third quarter--2.1 million bpd more than the second quarter call--and 30.5 million bpd in the fourth. This would leave a "sizable gap" between estimated production from OPEC and projected demand for its crude, the report said.

The International Energy Agency's (IEA) June 23 decision to release 60 million barrels of emergency oil stocks, however, has prompted some speculation as to whether Saudi Arabia will increase production to the extent that might have been anticipated immediately after the OPEC meeting.

The IEA said the effect of the disruption of Libyan crude exports had become more pronounced and that the normal seasonal increase in refiner demand over the summer would further exacerbate the shortfall.

The IEA said greater tightness in the oil market could undermine global economic growth, and that it would review the impact of the stock release within 30 days of June 23 to determine if a further release was necessary.

Global crude futures prices initially fell sharply after the IEA announced its stock release, but have since recovered all of that price ground.

Some participants in the survey, meanwhile, have revised their estimates of Venezuelan production following the International Energy Agency's re-evaluation of its Venezuelan supply methodology last month. This has resulted in the Platts survey's Venezuelan estimate rising to 2.35 million bpd in June from 2.23 million bpd in May.

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Platts: China's Oil Demand Up 8% YOY

- Platts: China's Oil Demand Up 8% YOY

Wednesday, June 22, 2011
Platts

China's apparent oil demand in May reached 39.4 million metric tons (mt) or an average of 9.31 million barrels per day (b/d), which was 8% higher year on year, as state-owned enterprises continued to increase output to meet local market supply needs, according to a Platts analysis based on recent statistics released by the Chinese government.

Still, May's apparent oil demand was lower than April's oil demand at 9.37 million b/d. It was also the second consecutive month of single-digit demand growth following the October 2010 to March 2011 period of monthly demand growth in excess of 10%.

"China's crude oil imports and refinery throughput continued to grow last month, albeit at a slower pace," said Calvin Lee, Platts senior writer, China. "More importantly, demand appears to have dropped another notch last month, contributing to rising inventories."

Chinese refiners processed a combined 38.47 million mt of crude oil in May, or an average of 9.1 million b/d, equating to a 7.5% increase year over year.

Tasked by the central government to maintain adequate supplies of refined products in the local markets, domestic refineries continued to run at a rapid pace last month in a bid to prevent any oil shortages in the country. Yet, May's throughput was only marginally higher than April's crude runs at 9.09 million b/d.

With China refineries experiencing very low or negative margins, the Chinese companies are not well motivated to process more crude to meet the potential diesel demand surge, industry consultancy FACTS Global Energy said in a brief earlier this month.

In the meantime, net product imports last month were only 930,000 mt, or an average of 0.21 million b/d. Thus, net imports in May were the lowest this year, reflecting the fact that Chinese companies' appetite for imports has ebbed due to high prices in the global markets.

According to an estimate released earlier this month by the National Development and Reform Commission (NDRC), China's consumption of refined products in May grew 5.2% year on year to 20.19 million mt. But consumption was down 28,000 mt from April.

Coupled with increased production, the May drop in consumption helped to boost inventories and oil product stocks at month’s close were one million mt greater than a year ago, the country's top economic planning agency said in its monthly industry report.

A month ago, NDRC reported that consumption of oil products in April grew at a faster pace of 8.3% year over year to 20.4 million mt. Oil product inventories at the end of April were 450,000 mt more than a year earlier.

In a separate report earlier this month, the NDRC said China's state-owned oil majors Sinopec and PetroChina held in storage by late May more than 13 million mt of refined products, a level which the NDRC termed as a "reasonable level."

"A recent supply crunch appears to have dissipated for now. But it could be a different story if power shortages worsen, forcing industrial users to fall back on diesel power generators, and peak summer demand for transportation fuels cause another tightening in supply," Lee said.

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Platts: OPEC Boosts Oil Output in May

- Platts: OPEC Boosts Oil Output in May

Tuesday, June 14, 2011
Platts

The Organization of the Exporting Countries (OPEC) pushed out an additional 200,000 barrels per day (b/d) of crude oil in May, boosting output to 29.04 million b/d from 28.84 million b/d in April, showed a just-released Platts survey of OPEC and oil industry officials and analysts.

OPEC kingpin Saudi Arabia, which vowed after OPEC's June 8 meeting in Vienna to ensure that world oil markets would not suffer any supply shortage, accounted for most of the additional barrels.

"You can see that the task ahead of Saudi Arabia, and any other nation determined to meet what is expected to be steadily increasing demand, is substantial," said John Kingston, Platts global director of news. A difference of opinion in what the market needs was the topic of unresolved debate at last week's OPEC meeting, which Saudi Oil Minister Naimi called the "worst ever," and which ended with the parley breaking up and taking no action.

"OPEC produced 29.8 million b/d before the Libyan uprising and it's only climbed back above 29 million b/d with the increases of the past month," Kingston added. "Most supply/demand estimates see an absolute minimum need for output of 30 million b/d in the second half of the year. It's a large jump, and all eyes will be on Saudi Arabia to see if it can get the job done."

Excluding Iraq, which does not participate in OPEC output agreements, the 11 members bound by quotas (OPEC-11) increased output by 160,000 b/d to 26.34 million b/d in May from 26.18 million b/d in April, the survey showed. This left OPEC-11 overproducing their notional 24.845-million-b/d target by 1.5 million b/d.

But that target, in place since January 2009, is now redundant following the failure of OPEC's June 8 ministerial meeting in Vienna to reach an agreement on output.

Saudi Arabia and its fellow Gulf Arab producers wanted OPEC to increase estimated April output of 28.8 million b/d by 1.5 million b/d to 30.3 million b/d, in line with the OPEC secretariat's projections of higher demand for OPEC crude in the second half of this year. Algeria, Angola, Ecuador, Iran, Libya and Venezuela opposed an increase.

As the Vienna talks broke up, Saudi oil minister Ali Naimi told reporters it and its Gulf neighbors intended to meet the expected higher demand.

"Saudi Arabia and the other three GCC countries are able and willing to supply whatever the market needs," he said, referring to Kuwait, the United Arab Emirates and Qatar which, with Saudi Arabia are members of the Gulf Cooperation Council, or GCC.

"The market is not going to see any shortage because we could not reach agreement at this meeting. We are willing and we are able and we will deliver what is needed," Naimi said.

Saudi Arabia, which had been producing well above its notional OPEC quota of just over 8 million b/d for some time, increased output by some 200,000 b/d in May, to 9.05 million b/d from 8.85 million b/d in April.

Other increases came from Nigeria, Qatar and Venezuela, while volumes dipped in Algeria, Angola, Iran, Libya and the UAE. Libyan crude production had been running close to 1.6 million b/d before the rebellion against the regime of Moammar Qadhafi, now in its fifth month, but dropped to an average of around 160,000 b/d in May from 200,000 b/d in April.

Saudi-owned newspaper al-Hayat reported, according to senior OPEC sources, June 10 that the country planned to raise oil production to 10 million b/d in July and to maintain that level for a month before reducing output in August in line with an expected dip in demand.

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Platts Survey: OPEC Pumps 28.84 Million Barrels of Oil Per Day in April

Platts Survey: OPEC Pumps 28.84 Million Barrels of Oil Per Day in April

Tuesday, May 10, 2011
Platts

The 12-member Organization of the Petroleum Exporting Countries' (OPEC) pumped an average 28.84 million barrels per day (b/d) of crude oil in April, down from 29.17 million b/d in March, a Platts survey of OPEC and oil industry officials and analysts showed May 9.

Excluding Iraq, which does not participate in OPEC output agreements, the 11 members bound by quotas (OPEC-11) pumped an average 26.18 million b/d during the month. This is down 340,000 b/d from the March estimate of 26.52 million b/d.

Lower volumes from Saudi Arabia, Libya and Angola accounted for almost the entire drop.

"With oil prices taking center stage, many pundits have dismissed fundamental supply and demand as a factor in the recent increases," explains Platts Global Director of News John Kingston. "One need go no further than these latest statistics to see one reason as to why the price of crude has risen so sharply. It's nice to point to an easily-understood concept like excessive speculation, but losing one million barrels per day of supply over the last two months in a market where demand has been climbing is having the result economic supply/demand theory would suggest it should have."

Some participants in the survey revisited their March estimates for Saudi Arabia after oil minister Ali Naimi said last month that the kingdom had slashed production by some 700,000 b/d to 8.29 million b/d in March because the oil market was oversupplied.

But some industry sources wondered whether the minister's figure might not have been intended as an average for the month, noting that the kingdom had submitted a figure of 8.655 million b/d to the International Energy Forum's Joint Oil Data Initiative, or JODI, for March.

In early March, Naimi said Saudi Arabia had increased production to 9 million b/d to make up for the loss of Libyan output and had even created a special blend of crude similar in quality to the lighter, lower-sulfur content Libyan grades. Refiners have shown little appetite for the new Saudi concoction, however.

The survey showed Libyan output dropping further in April, to just 200,000 b/d from 460,000 b/d in March.

In the United Arab Emirates (UAE), the 200,000-barrel-per-day drop in production from the offshore Upper Zakum field does not appear to have had an impact on overall output for the month. Industry sources said Abu Dhabi kept supply steady by amending production levels at other fields and tapping into storage to meet export commitments.

Angolan production fell 100,000 b/d to 1.6 million b/d, as maintenance and repair work continued on Greater Plutonio.

Qatari production also dipped slightly due to the production shut down at a platform of Denmark's Maersk Oil at the offshore Al-Shaheen field following a fire on April 21.

The 470,000-barrel-per-day decreases more than offset the increases of 190,000 b/d. Higher Nigerian output accounted for the bulk of the increases, but volumes also rose in Ecuador, Iraq, and Kuwait.

The latest estimates leave the OPEC-11 overproducing its official target of 24.845 million b/d by 1.385 million b/d.

There had been a suggestion earlier this month that OPEC kingpin Saudi Arabia might want to see OPEC raise its official output target at the upcoming June 8 meeting to a level closer to actual production. Subsequent soundings would appear to rule out such a move, however.

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