Stalemate To Persist In OIl Market

The “big news” this month is that the banks granted over-leveraged, loss-making shale oil drillers a stay of execution by continuing to provide credit lines. Consequently, there was no major move in U.S. oil drilling or production, though both are trending down. Elsewhere, the story is one of production plateaus and stabilization of rig counts. The modest production rises and falls detailed below are simply noise on these production baselines.

Against this backdrop of no news, the oil price traded sideways in October. OPEC countries, Russia and International Oil Companies are all losing billions and look set to continue doing so throughout 2016 as over-supply now looks likely to remain until early 2017. The situation is one of stalemate as opposed to checkmate.

  • World total liquids production down 80,000 bpd to 96.56 Mbpd.
  • OPEC production down 90,000 bpd to 31.72 Mbpd (C+C)
  • N America production down 220,000 bpd to 19.46 Mbpd.
  • Russia and FSU up 60,000 bpd to 13.94 Mbpd
  • Europe up 140,000 bpd to 3.30 Mbpd (compared with August 2014)
  • Asia down 30,000 bpd to 7.91 Mbpd.
  • Middle East rig count is stable. The international oil rig count has stopped falling. The U.S. oil rig count has turned down again.

supply and demand data form IEA.First Q 2014 over-supply has persisted.  Since first quarter 2014 over-supply situation has persisted – IEA

Summary…OPEC, Russia and the FSU, SE Asia and Europe are all producing at plateau levels with no significant moves up or down in recent years. The only region with significant trend is N America where declines of 660,000 bpd from the April peak are modest compared with the production growth that preceded the peak and current over-supply running at 1.5 Mbpd.

Source: Oil Market Stalemate To Parsisit Until End of 2016? OILPRCE, by Euan Means, November 2, 1015.