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Comparative Analysis of monthly reports on the oil market

Comparative Analysis of Monthly Reports on the Oil Market

1. International Policy and Market Context

Oil prices rebound after plunging due to new COVID variant

  • Oil prices plunged by more than 10 percent in late November after the World Health Organization labeled the new-found Omicron COVID variant as a “variant of concern.” Questions surrounding vaccine effectiveness and fears that governments may reimpose restrictions to curb its spread led to one of the biggest daily price collapses in the past two decades. Fears have since subsided and Brent and WTI crude benchmarks have recovered. However, continued uncertainty has the IEA cutting its Q1 demand by 600 kb/d while OPEC reported an increase of 1.11 mb/d.

European and Asian power prices hit record highs

  • Electricity prices climbed to fresh records. For example, power prices for delivery next year rose by over 15 percent in Germany and almost 14 percent in France. European and Asian utilities are burning more coal and fuel oil due to low natural gas availability, robust demand in winter. Markets are also affected by seasonal factors such as low renewable output and increased exposure to short-term market trends and other risks.

US releases oil from Strategic Petroleum Reserve in coordination with partner countries

  • On 23 November US President Joe Biden instructed the Department of Energy to make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve (SPR) to lower domestic oil prices and ease market imbalances. Partner countries followed suit with their own releases the first such move of its kind without the coordination of the International Energy Agency. Major energy consuming nations that partnered with the US decision include China, India, Japan, South Korea, and the United Kingdom.

23rd OPEC and non-OPEC Meeting reaffirms production adjustments and remains in session

  • On 4 November, OPEC and non-OPEC countries reconfirmed the production adjustment plan and the monthly production adjustment mechanism approved at the 19th OPEC and non-OPEC Ministerial Meeting on 18 July and decided to adjust the monthly overall production by 0.4 mb/d for the month of January 2022. Parties remain in session to monitor the market closely and make immediate adjustments if required. The 24th OPEC and non-OPEC Ministerial Meeting is scheduled for 4 January 2022.

2. Key Points

2.1 Demand

The IEA and EIA lower 2021 oil demand growth assessments while OPEC remains stable.

  • The IEA's demand growth assessment falls year-on-year (y-o-y) by 120 kb/d to 5.37 mb/d for 2021. Demand is expected to grow by 3.34 mb/d in 2022, the IEA reports.
  • OPEC's y-o-y demand growth remains the same at 5.65 mb/d this year. Next year it forecasts a growth of 4.15 mb/d.
  • EIA's assessment falls by 10 kb/d for a growth of 5.10 mb/d this year and it sees growth of 3.55 mb/d in 2022. The IEA, OPEC, and EIA estimates for absolute world demand are now 96.19 mb/d, 96.63 mb/d, and 96.91 mb/d for 2021, respectively.

The IEA, OPEC and EIA converge on OECD growth but differ on non-OECD demand growth in 2021.

  • The IEA's assessment of y-o-y non-OECD demand growth falls by 120 kb/d to 2.87 mb/d, while OPEC also makes a downward revision of 20 kb/d for overall growth of 3.20 mb/d. EIA non-OECD demand growth falls by 70 kb/d for a growth of 2.68 mb/d.
  • The IEA's estimate for OECD demand falls by 10 kb/d to 2.49 mb/d for 2021. EIA OECD growth rises by 60 kb/d for a growth of 2.42 mb/d. OPEC OECD demand growth forecast rises by 20 kb/d for a growth of 2.46 mb/d.
  • IEA and EIA assessments of OECD demand growth differ by 70 kb/d, while OPEC and EIA estimates of non-OECD demand growth differ by 520 kb/d.

2.2 Supply

OPEC and EIA make upward revisions on non-OPEC supply growth while IEA remains static.

  • The IEA's December assessment of non-OPEC remains the same at 0.72 mb/d, while the EIA reports a slightly higher overall supply growth of 0.86 mb/d y-o-y, revised up by 50 kb/d from last month. OPEC non-OPEC supply growth also rises slightly by 20 kb/d for a growth of 0.68 mb/d. Non-OPEC supply growth is expected to increase into 2022 with the IEA reporting growth at 2.93 mb/d, OPEC at 3.02 mb/d, and EIA at 3.03 mb/d. In absolute values, the IEA, OPEC, and EIA estimate non-OPEC supply at 63.73 mb/d, 63.65 mb/d, and 64.00 mb/d, respectively for 2021.
  • The IEA estimates OECD oil supply growth this year at 0.26 mb/d, OPEC pegs it at 0.29 mb/d, and EIA reports a growth of 0.49 mb/d, an increase of 90 kb/d, 70 kb/d, and 110 kb/d, respectively. In absolute terms, the IEA, OPEC, and EIA estimate OECD oil supply at 28.20 mb/d, 29.41 mb/d, and 31.05 mb/d, respectively for 2021. The difference between IEA and EIA on OECD supply growth is 230 kb/d.

The EIA reports higher non-OECD supply growth than the IEA and OPEC.

  • The IEA's non-OECD supply growth assessment is revised down by 10 kb/d to 0.20 mb/d. OPEC's forecast reports a growth of 0.25 mb/d for 2021, which is revised down by 80 kb/d from last month. The EIA is more optimistic for non-OECD supply growth, forecasting a rise of 0.37 mb/d, a figure that was revised down by 60 kb/d from last month. OPEC and EIA report higher growth in 2022 at 1.55 mb/d and 1.45 mb/d, respectively while the IEA forecasts growth at 1.17 mb/d.
  • In absolute values, the IEA, OPEC, and EIA non-OECD supply estimates are 30.53 mb/d, 31.96 mb/d, and 32.95 mb/d, respectively for 2021. Divergence on total non-OECD supply growth is widest between the IEA and EIA, differing by 170 kb/d.

The IEA, OPEC, and EIA revise OPEC production estimates upwards for November.

  • The IEA revised its OPEC production estimate upward by 310 kb/d month-on-month (m-o-m) to reach total production of 27.75 mb/d. OPEC's assessment of its own production was revised upwards by 290 kb/d to 27.72 mb/d. The EIA also increased its assessment by 320 kb/d for total OPEC crude production of 27.70 mb/d.

2.3 Stocks

The IEA, OPEC, and EIA continue to display strong alignment on stock figures which are now below the five-year average but still at or higher than 60 days forward cover.

  • The IEA reports OECD stock levels at 2737 mb, which is close to OPEC's assessment of 2773 mb and EIA's assessment of 2777 mb. These are 243 mb, 207 mb, and 189 mb below the five-year average, respectively.
  • According to the IEA, crude oil inventories built by 17.8 mb while product stocks drew by 42.3 mb. Other oils, including NGLs and feedstocks built by 3.3 mb. According to OPEC, crude oil stocks built by 9.4 mb while products built by 0.5 mb.
  • EIA estimates OECD inventories dropped by 9 mb in October to 2777 mb – 189 mb below the five-year average.
  • The widest divergence in inventories is between IEA and the IEA which stands at 40 mb. Total US crude inventories (excluding SPR) amount to about 433 mb, according to the EIA, which is 7 percent below the five-year average for this time of year. OPEC also reports US commercial crude oil stocks at about 433 mb and around 35 mb below the five-year average.

2.4 Snapshot (mb/d)

Table: Snapshot of demand, supply and stocks

3. Global Analysis

3.1 Demand Data

Figure 1
Chart: Monthly Revisions of Annual Estimates for Oil Demand Growth

3.2 Supply Data

Figure 2
Chart: Monthly Revisions of Annual Non-OPEC Liquids Supplies Estimates

3.3 Stock Data

Figure 3
Chart: Monthly Estimates of OECD Total Commercial Oil Stocks
Figure 4
Chart: OECD Total Commercial Oil Stocks Relative to 5-year Moving Average

IEF-Kayrros Stock Analysis:

Figure 5
Chart: Global Inventories
Figure 6
Chart: Non-OECD Inventories
Figure 7
Chart: Chinese Crude Stocks
Figure 8
Chart: Non-OECD Inventories

JODI Data:

Figure 9 - US Crude Oil Closing Stocks
Chart: US Closing Stocks

US crude oil closing stock level rose month-on-month in October for the first time since March 2021. Stocks rose by 7.07 mb to 1045.73 mb, but remain 37.7 mb below October 2019 levels.

Figure 10 - US Gasoline Closing Stocks
Chart: Korea Crude Oil Closing Stocks

US gasoline closing stock level in fell month-on-month in October by 15.51 mb to its lowest level since October 2014 at 213.6 mb.

Figure 11 - UK Crude Oil Closing Stocks
Chart: UK Crude Oil Closing Stocks

UK crude oil stocks fell month-on-month in October by 811 kb to 19.78 mb registering the lowest level since monitoring began in January 2002.

Figure 12 - UK Total Oil Products Closing Stocks
Chart: Germany Crude Oil Closing Stocks

UK total oil products closing stock level in October fell by 734 kb to 40.24 mb, its lowest level since November 2018.

Figure 13 - Korean Crude Oil Closing Stocks
Chart: Germany Crude Oil Closing Stocks

Korean crude oil stocks fell in October for a sixth consecutive month by 811 kb to 105.53 mb – its lowest level since February 2011.

Explanatory Note

The IEF conducts a comprehensive comparative analysis of the short-, medium-, and long-term energy outlooks of the IEA OPEC, and the EIA to inform the IEA-IEF-OPEC Symposium on Energy Outlooks that the IEF hosts in Riyadh as part of the trilateral work programme on a yearly basis.

To inform IEF stakeholders on how perspectives on the oil market of both organisations evolve over time regularly, this monthly summary provides:

  • An overview of key events and initiatives in the international policy and market context.
  • Key findings and a snapshot overview of data points gained from comparing basic historical data and short-term forecasts of the IEA Oil Market Report, the OPEC Monthly Oil Market Report, and the EIA Short-term Energy Outlook.
  • A comparative analysis of oil inventory data reported by the IEA, OPEC, and EIA, and secondary sources in collaboration with Kayrros (added in an updated report on the IEF website).

The International Energy Forum

The International Energy Forum is the leading global facilitator of dialogue between sovereign energy market participants. It incorporates members of International Energy Agency and the Organization of the Petroleum Exporting Countries, and also key players including China, India, Russia and South Africa. The forum's biennial ministerial meetings are the world's largest gathering of energy ministers, where discussions focus on global energy security and the transition towards a sustainable and inclusive energy future. The forum has a permanent secretariat of international staff based in the Diplomatic Quarter of Riyadh, Saudi Arabia. For more information visit www.ief.org.

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