The three major health determinants of today's oil industry are 1) global demand, 2) US production, and 3) OPEC production. Every month, OPEC as an organization publishes its own forecast for the appearance of the oil industry, and although it does not forecast its own production as a team, they give a look at the last few months when market participants were given an overview of the oil produced and what was produced it means for the global market. In its latest report, the group aimed at production in April, which remained virtually unchanged from a month earlier. However, coupled with global demand, investors are likely to see a very optimistic picture in the future.
OPEC production flattened
In April, OPEC managed an average output of 30.031 million barrels per day, about 3 . 000 barrels a day less than a month earlier. However, this does not mean that every member state has seen its output flatline. Far from it. To take a look at the group as a whole and at the individual nations, please have a look at the following picture.
As you can see in the picture, there were some big swings from several members of the group. The most significant movement came from Iran, whose oil production declined by 0.164 million barrels per day from 2.718 million barrels a day in March to 2.554 million barrels a day in April. This decline is almost certainly due to the lifting of sanctions and the (perceived) fear that the exemption of certain nations buying crude oil from Iran could not be renewed. The only other major downtrend in the month was Saudi Arabia, which produced 9.742 million barrels per day, 45 000 barrels a day less than what we saw in March.
Although these decreases were significant, other nations came in and made up for the declines. The forerunner was Iraq, whose output rose by 4.513 million barrels per day to 4.630 million barrels per day by 0.113 million barrels per day and almost recovered from the decline from February to March. Libya and Nigeria recorded an increase in production of 71 (1945,9006), 000 (1945,9007) and 92 (1945,9006), 000 (1945,9007) barrels per day compared to the previous month, and even Venezuela faced a modest increase over a modest economic crisis Increase of 28 000 barrels per day (probably a recovery caused by the 0.281 million barrels per day drop in the previous month, partly caused by temporary nationwide power outages).
In the next few years It is likely that production from Saudi Arabia will remain broadly stable in the coming months (adjusted for any increases to cover losses from Iran), but as the recent news has shown, there are still reasons for this The tough attitude of the Trump administration towards Iran raised geopolitical risks. Production in Iraq is likely to increase somewhat during this period, but nations such as Libya, Nigeria and Venezuela in particular should experience extreme volatility, with the first two nations having real upside and downside potential, while Venezuela's path should be towards lower production ,
Oil Bulls Look Positive
The picture for oil investors is undeniably optimistic, no matter how you see it. Without even considering Russia-related considerations that I wrote about in a previous article on OPEC data that I still believe to be relevant, the world is either in a state of deficit or moving rapidly towards it. To see this in detail, you only need to look at the following table.
As you can see here, global demand for 2017 is slightly more bullish (up to 30 000 barrels per day), 2018 and 2019) compared to the month of march. The offer, however, is much more attractive to bulls. In 2017, production was expected to be 0.30 million barrels per day below the estimated one month ago. This should result in a decline in supply of 0.21 million barrels a day last year and 0.25 million barrels this year compared to previous forecasts. It is noteworthy that I used the OPEC results for the first quarter of this year for the bid and then extrapolated the results for the remainder of this year to the year, so that significant changes compared to April production levels have a significant impact on crude oil balances could.
As the table shows These changes, especially on the supply side, have a significant impact on the global oil markets. Assuming that everything that OPEC has presented is correct, the end result is exciting. The total deficit in 2017 was estimated not only at 120.45 million barrels, but also at 87.60 million barrels. Overall, this year's total deficit is expected to be 164.25 million barrels, bringing the total deficit to 507.35 million barrels between 2017 and 2019. This is around 310.25 million barrels more than in the previous month. Granted, most of this has been used to fix the existing overload, but this problem is largely eliminated and we are in a state where actual inventory levels could drop worldwide.
Based on the data provided, it seems that the market is really looking for oil bulls. Although global production is increasing, supply looks attractive, and given OPEC's limited production, it is very likely that the market will only improve for bulls from here. Certain activities, such as the slowdown in the economy or the reversal of OPEC and some non-OPEC members (mainly Russia) or an even faster increase in US production than expected, could change this for the worst, but without one of them Events could make the bullish picture noticeable.
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Disclosure: I / we have no positions in the named shares It is not planned to fill a position within the next 72 hours. I wrote this article myself and voiced my own opinion. I can not get any compensation for it (except from Seeking Alpha). I have no business relationship with a company whose shares are mentioned in this article.