OPEC ReportOPEC released their June '21 Monthly Oil Marketing report today. It is a very good and comprehensive outlook on the world oil market. A few observations on the numbers in their report:
- Total Non-Opec Supply is expected to increase by about 2 million bpd between Q2 and Q4 '21, and about half of that increase is expected to come from the US.
- Total non-Opec supply PLUS Opec NGL production is expected to be 69.5 and 70.4 million bpd in Q3 and Q4 '21 respectively.
- World Oil demand is projected to be 98.2 and 99.8 million bpd in Q3 and Q4 '21 respectively.
- Thus, DEMAND for OPEC crude is projected to be 28.7 and 29.4 million bpd respectively in Q3 and Q4 '21.
- OPEC crude Oil production in May '21 was 25.5 million bpd
It seems to me that their forecast for US production may be optimistic. Will the US be adding 1 million bpd of production between Q2 and Q4? I would guess no.
Assuming their projections are all correct, OPEC will have to increase crude production by about 3 million bpd in Q3 and about 4 million bpd in Q4. If you look at the individual OPEC producers you would have to think that this increase in production will have to come from from SA, UAE, Kuwait, Iraq and Iran, and NO ONE else. This level of sustained increase might be hard to achieve even for those producers... and if US cannot increase their production the requirement for OPEC crude will be even higher.
The last half of '21 will be interesting. We could see very strong oil price. The run up so far might be just the beginning.