OPEC disparities reign

Oct 28, 2016 11:15:48 AM EST

Despite a weaker dollar,  oil prices are limping lower into the weekend, set for a first weekly decline in six. Next week we get a new month, and an onslaught of new economic data to distract from ongoing OPEC rhetoric; for now, hark, here are five things to consider in oil markets today:

1) A combination of factors explain why we are seeing much lower West African imports to the U.S. East coast in our ClipperData: the wider WTI-Brent spread in recent months, depleted crude export loadings from Nigeria, less demand due to refinery maintenance in the U.S., and higher Asian demand of late.

Regardless, U.S. East coast imports of Angolan and Nigerian grades have dropped by nearly half from their peak for the year in July. Nigerian grades this month are at their slowest pace since January. Nonetheless, volumes have still quadrupled through the first nine months of the year compared to year-ago levels.     

US oil imports from West Africa ClipperData.jpg2) Chart of the day award (oh, go on, chart of the week), goes to the below. For 2016 has seen a record amount of equity issuances this year, despite lower oil prices. $27.5 billion has been raised so far this year, and as the chart below illustrates, these companies have rampantly rallied, especially the ones who issued equity in the first quarter - when oil prices were at their lowest ebb:   

share issuance.jpg

3) China may be the biggest destination for OPEC crude exports, with deliveries averaging over 3.8 million barrels per day this year, but it is India who has seen the biggest rise in volumes over the last few years. Our CliperData show that Indian crude imports reached a record last month at 4.3 million barrels per day; OPEC accounted for 90 percent of these deliveries.

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Through the first nine months of this year, exports to the emerging market from Saudi Arabia, Iran and Iraq have risen by nearly a third, accounting for nearly half of all Indian crude imports:

iran iraq saudi loadings to India ClipperData.jpg4) While on the topic of Iraq, the disparity betwixt primary and secondary sources in their production is niftily highlighted in the chart below. The Iraqi government says its production is at 4.775 million barrels per day, some 320,000 bpd higher than secondary, independent sources.

All the while, the Iraqi oil ministry admits that it does not have access to official production figures for oil fields controlled by the Kurdistan Regional Government in the Kurdistan and Kirkuk regions; it is instead estimating these numbers

iraq disparity.jpg

5) Finally, the chart below shows consumption in the U.S. of renewable energy. According to EIA, 4.7 percent of electricity generation came from wind, while just 0.6 percent came from large solar farms. 

Power generation from renewable energy would be higher if it weren't for federal permitting and environmental reviews that delay installations on federal land. The Bureau of Land Management (BLM) is looking to issue a new rule in the coming weeks in an effort to streamline the process, which is hoped to dramatically increase renewable energy generated on federal land.   

US renewable power.jpg

About the Author

Matt Smith

deciphers and distills what is most relevant across the energy complex into cohesive and pithy knowledge you can use. The belly laugh is a bonus.

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