Non-OPEC Crude Oil Update: First Half 2010

Global production of crude oil turned away from its year long recovery of 2009, and lurched downward again this Spring.  Fresh data through June, just updated from the EIA on Friday, shows that Non-OPEC is leading the downturn coming off the Winter highs.  After recovering to a 2010 high of 42.435 mbpd (million barrels a day) in March, Non-OPEC oil production has fallen in April, May and now June to 41.970 mbpd. The declines have also come via downward revisions, as even higher totals in the first half of 2010 have now been taken away. The data update is fresh as of today from EIA Washington, and is current through June 2010:

It’s important to remind that Non-OPEC supplies the world with 57% of its oil. And, while 75.00 dollar oil was certainly a high enough price to bring on the new, marginal barrel in high-cost Non-OPEC regions from 2000-2005, it’s not clear that 75.00 dollar oil is enough now to fight declines from existing fields. No doubt 75.00 dollar oil looks good in some regions. But in a world of ultra-deepwater, and unconventional oil resources, 75.00 dollar and the attendant price uncertainty may not give enough confidence to the industry to create alot of new supply. Finally, let’s not forget that the peak year for Non-OPEC supply remains 2004, at an annual average of 42.068 mbpd. Unsurprisingly, the inability of global oil production to have bested the peak year of 2005 is being driven by its largest component: Non-OPEC supply.

-Gregor

  • Tirebiter_g

    Look how noisy that data series is, Gregor. I think you are reading too much into a zag in a long series of zigs and zags. Maybe a moving average would show the trends more clearly.

    Nevertheless, I agree with you that the world is running out of cheap oil. Prices will rocket if the US and European economies get healthy. My favorite plays are the Canadian trusts.

  • gregor.us

    Well, I am not merely reading into the chart.The quantity of information I have in hand of course dwarfs what appears in the chart, but, just to address the chart specifically.

    We can expect the data to be noisy as this is a chart of the extraction of a natural resource.

    Also, the trend break in supply growth after 2003 is pretty clear.

    In a way, one doesn't really need to read anything into the chart. Combined with the enormous quantity of other information, I think we have passed into a stage where things are rather self-evident.

    G

  • http://twitter.com/MantaPartner Peter Hefner

    Interesting that whilst Oil was peaking in price, 2008, the spicket seemed to have been turned off. Does this show the influence of financial players who would be holding out inventory for a better future price?

  • Craig

    Gregor,
    A couple of questions:
    1. Is Iraq considered and OPEC country? If so, does the 'war' in Iraq factor into the plateau we are seeing here?
    2. How much do you think that the OPEC countries are able to control their output based on their best interests? Are they tied through international agreements to supply defined amounts to their buyers?
    Thanks<
    Craig.