Nigeria and Angola are among the largest under producers of crude oil in January, accounting for the failure of the Organisation of Petroleum Exporting Countries (OPEC) to meet its oil daily and monthly production target for the month.
Other countries in this category include Congo and Equatorial Guinea. However, only two OPEC members produced above their January target – Algeria and Gabon.
In January, OPEC group lifted production only by 210,000 additional barrels per day for the month instead of its approved 400, 000 bpd. This created a shortfall of 190,000 barrels per day in the just ended month. But looking back at the base amounts that OPEC is working with, and factoring in each month’s planned increased production, January production cuts from OPEC show a much larger shortfall.
According to analysts at oilprice.com, the organisation’s actual January production cuts still amounted to 2.803 million barrels per day short of the base levels when OPEC agreed to the cuts.
This compares to the pledged cut for January of 2.129 million bpd. This equates to an extra 674,000 bpd in cuts for January than what OPEC has agreed to.
In terms of actual production, OPEC produced 27.8 million bpd in December, lifting this to 28.01 million bpd in January. Noteworthy increases came from Saudi Arabia (+100,000 bpd), Nigeria (+50,000 bpd), and the UAE and Kuwait (+40,000 bpd each). These production gains were partially offset by decreased output by Iraq (-30,000 bpd) and Libya (-40,000 bpd).
Of all the OPEC members, it is Saudi Arabia, however, that has the most in terms of numbers of barrels to add back into the market as part of the future production ramp up, which reports say stands at 878,000 bpd.
OPEC has said it will keep examining the potential impact that the threat of some consuming countries to release 70 million barrels (mb) from their strategic reserves will have if they make good their threat.
Its Secretary General, Dr. Mohammad Sanusi Barkindo yesterday broke the news in his remarks at the 59th Meeting (videoconference) of the Joint Technical Committee.
He said: “We are also continuing to assess the potential near-term impacts if some leading consuming countries carry through with their announced plans to release an estimated 70 mb from their strategic oil reserves.”
In terms of the economy, the scribe said, the global economic growth forecasts for 2021 and 2022 remain unchanged at 5.5per cent and 4.2per cent, respectively, from last month.
Barkindo added that “Looking at the demand picture, we foresee world oil demand increasing by 5.7 mb/d in 2021 and by 4.2 mb/d, both unchanged from last month.”
In terms of the supply-side, non-OPEC supply in 2021, said the Secretary General, is expected to grow by 700,000 b/d to average 63.7 mb/d, unchanged from last month.
According to him, for 2022, non-OPEC supply growth is forecast at 3.0 mb/d for an average of 66.7 mb/d, also unchanged from last month.
He said looking at inventories, preliminary December 2021 data showed that total OECD commercial oil stocks fell by 31.2 million barrels month-on-month to stand at 2,725 mb.
Barkindo added that this is 311 million barrels lower than the same time one year ago and 202 mb below the 2015-2019 average.
He revealed that “given the significant uncertainties related to the outlook on demand and non-OPEC supply growth, we will consider three scenarios today that were developed by the Secretariat to provide insight into the direction of the market moving forward.”
He noted that the Declaration of Commitment (DoC) producers continue to be fully committed to achieving joint efforts.
In December 2021, said Barkindo, OPEC-10 and the participating non-OPEC countries achieved overall conformity levels of 127per cent and 114 per cent, respectively.
He said overall conformity levels for OPEC-10 with the participating non-OPEC countries was 122 per cent.
Barkindo recalled that last Wednesday, the US Federal Reserve met and signalled that it will be unwinding the generous stimulus measures it introduced in the wake of the pandemic.
He cited Fed Chairman Jerome H. Powell at a news conference after the meeting, saying “Citing a strong labour market and rapidly rising inflation, the Fed said it would most likely raise interest rates in the months to come, potentially starting next month.”
He quoted him as saying: “This is going to be a year in which we move steadily away from the very highly accommodative monetary policy that we’d put in place to deal with the economic effects of the pandemic.”
Barkindo noted that “although we still envisage healthy economic growth in the next two years, we are keeping our eyes on the ongoing volatility in the market due to rising inflationary pressures, ongoing supply chain disruptions, central bank policy decisions and geopolitical developments.”
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