The big news in April’s production numbers is the surge in global production by 250,000 bpd that is largely down to a 300,000 bpd surge from Iran that the IEA now deems to be producing at capacity. The oil price rally continued through May into June with Brent now over $50 supported by the Fort McMurray black swan and growing unrest in the Niger Delta that the WSJ reports has knocked 1 Mbpd off Nigeria’s production.
Drilling continues to decline across the board with US oil+gas rigs = 404, a mere shadow of the 2000 operational rigs seen in 2011.
The following totals compare April 2016 with March 2016:
- World Total Liquids up 250,000 bpd
- USA down 40,000 bpd
- North America down 110,000 bpd (includes USA)
- OPEC up 320,000 bpd
- Saudi Arabia unchanged
- Iran up 300,000 bpd
- Russia + FSU down 90,000 bpd
- Europe down 30,000 bpd (YOY)
- Asia down 20,000.
This article first appeared on Energy Matters.
Figure 1 – The oil price rally continued through May and into June with Brent now trading at $50 aided by the Fort McMurray fire in Alberta. The oil production statistics in this report are for April and we will need to wait until the IEA report in mid-June to see what impact that fire had on Canadian production.
Figure 2 – Last month I said this ‘At this scale, the oil price recovery is brought into perspective. The price needs to break above $50 to be ‘sure’ that the current price crisis is over.’ It is beginning to look as though the worst of the price rout is over although there is little sign of significant falls in production and at $60 I would not be surprised to see drillers going back to work. It will be a great time to pick up rigs and crews at rock bottom rates.
Figure 3 – Not updated since March.
Figure 4 – The US oil rig count continues to plunge with relatively little impact upon production (Figure 6). The oil rig count is down 16 for the month while the gas rig count has paused with zero change for the month. The gas rig count stands on 87 compared with 1600 back in 2008!
Figure 5 – Stacking the lines from Figure 4 shows that US drilling has now declined below any level seen for over 20 years.
Figure 6 – The near-term peak in US production was 13.24 Mbpd in April 2015. The May 2016 figure was 12.60 Mbpd, down 640,000 bpd from that peak and down 40,000 bpd from last month that to large extent reflects data revisions. The decline in the USA represents 74% of the total global decline.
Figure 7 – OPEC production has been rock steady for 12 months (dashed line) and currently stands at 32.02 Mbpd, up 320,000 bpd on March. Much of this rise comes from Iran (see Figure 10). New OPEC member Indonesia is included in the Asia chart (Figure 15), since changing baselines distorts the picture.
Figure 8 – With the exception of Saudi Arabia, OPEC spare capacity is now all but zero. According to the IEA, Iran is now pumping at capacity with spare capacity effectively set to zero.
Figure 9 – In April, Saudi production stood at 10.19 Mbpd, unchanged from March. NZ = neutral zone which is neutral territory that lies between Saudi Arabia and Kuwait where production from the Wafra heavy oil field is now effectively zero. Saudi Arabia is effectively pumping at capacity. The fabled 2 million bbls per day spare capacity is either a figment of imagination or heavy oil that has no refining market.
Figure 10 – Iran has quickly ramped up to full production following the easing of sanctions. Production now stands at 3.56 Mbpd, 980,000 bpd above the 2013 low point. It remains to be seen if Iranian production continues to rise from this point.
Figure 11 – Drilling activity in the ME OPEC countries is falling slowly but remains on a cyclical high. Iran and Iraq are not included since their drilling history is so scarred by wars and sanctions this distorts the picture.
Figure 12 – The international oil rig count continues its decline, down another 20 in April. While US rigs are now below levels seen in the 1999 crash (Figure 5), international rigs, which include the robust Middle East, have a long way to go before they reach that level.
Figure 13 – Russia and other FSU produced 14.1 Mbpd in April, down 90,000 bpd. There is no sign of Russian production buckling under price pressure and if anything it continues to rise slowly.
Figure 14 The cycles in European production data are down to summer maintenance programs in the offshore North Sea province. We are now on the cycle high, and North Sea production may fall in the coming months as maintenance programs get under way. New data and data revisions now show that the North Sea has been turned around, with production rising slowly. Several years of $100 oil and record investment has paid off while at the same time contributing to the oil price crash.
To get an idea of trend it is necessary to compare production with the same month a year ago. European production is down 30,000 bpd to 3.51 Mbpd compared with a year ago.
- Norway Apr 2015 = 1.95 Mbpd; Apr 2016 = 2.00 Mbpd; up 50,000 bpd YOY
- UK Apr 2015 = 1.03 Mbpd; Apr 2016 = 1.05 Mbpd; up 20,000 bpd YOY
- Other Apr 2015 = 0.56 Mbpd; Apr 2016 = 0.46 Mbpd; down 100,000 bpd YOY
Figure 15 – This group of S and E Asian producers has been trending sideways since 2010 but it has been trending down for the last year. The group produced 7.62 Mbpd in April, up 10,000 bpd. Note that Indonesia (an oil importer) has rejoined OPEC. The OPEC production numbers are reported ex NGL by the IEA and this has meant a 170,000 bpd drop in reported Indonesian production.
Figure 16 – N American production topped in April 2015 at 20.12 Mbpd. Group production now stands at 19.47 Mbpd down 110,000 bpd on last month and down 650,000 bpd from the April 2015 peak. This remains a trivial decline but at some point the collapse in US drilling is going to bite hard (Figures 4 and 5) – I have been saying this for many months now! And it will be interesting to see to what extent the Fort McMurray fire impacts tar sands production, if at all.
Figure 17 – Total liquids = crude oil + condensate + natural gas liquids + refinery gains + biofuel. April production was 96.21 Mbpd up 250,000 bpd on the revised March figure and down 870,000 bpd from the July 2015 peak. Most of the gains in April may be attributed to Iran.There is still a way to go before production gets below the long-term dashed trend line.
Figure 18 – Some commenters have questioned using the IEA total liquids data noting that it includes NGLs and biofuels and that this may mask what is actually going on with crude oil production. Hence I include this chart with crude oil production from the EIA that has data to February 2016. While crude oil production has grown more slowly than total liquids, there is little evidence from the EIA crude numbers for significant decline in global production.
Note that the US based EIA used to publish a good array of oil production statistics to match the IEA, but fell far behind with reporting dates owing to budget cuts. They have now re-instated more up-to-date reporting for a smaller group of countries. But February is still not exactly bang up-to-date. H/t Ron Paterson for the EIA link. Tabel 11.1b World Crude Oil Production.
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