“August Global oil shortage, 2.77 million barrels daily, OPEC Output falls short 684,000 barrels per day”

Global oil shortage at 2.77 million barrels per day in August as OPEC, Output falls short of quota by 684,000 barrels per day,” Commenter and Blogger, RJS, Focus on Fracking

OPEC’s Monthly Oil Market Report “The Latest US Oil Supply and Disposition Data from the EIA” 

Monday of this week saw the release of OPEC’s September Oil Market Report, which covers OPEC & global oil data for August, and hence it gives us a picture of the global oil supply & demand situation in the first month after ‘OPEC+’ agreed to increase their output by 400,000 barrels per day monthly from the previously agreed to July level, thus beginning the fifth production quota policy reset they’ve made over the past year and a half, all in response to the pandemic-related slowdown and subsequent recovery . . . but before we start in, we want to again caution that the oil demand estimates made by OPEC herein, while the course of the Covid-19 pandemic still remains uncertain in most countries around the globe, should be considered as having a much larger margin of error than we’d expect from this report during stable and hence more predictable periods..

The first table from this monthly report that we’ll check is from the page numbered 50 of this month’s report (pdf page 60), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings below indicate . . . for all their official production measurements, OPEC uses an average of estimates from six “secondary sources”, namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, ‎the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as a means of impartially adjudicating whether their output quotas and production cuts are being met, to thereby avert any potential disputes that could arise if each member reported their own figures . . .

August 2021 OPEC crude output via secondary sources

As we can see on the bottom line of the above table, OPEC’s oil output increased by 151,000 barrels per day to 26,762,000 barrels per day during August, up from their revised July production total of 26,611,000 barrels per day . . . however, that July output figure was originally reported as 26,657,000 barrels per day, which therefore means that OPEC’s July production was revised 46,000 barrels per day lower with this report, and hence OPEC’s August production was, in effect, just a 105,000 barrel per day increase from the previously reported OPEC production figure (for your reference, here is the table of the official July OPEC output figures as reported a month ago, before this month’s revision).

The next graphic from this month’s report that we’ll highlight shows us both OPEC’s and worldwide oil production monthly on the same graph, over the period from September 2019 to August 2021, and it comes from page 51 (pdf page 61) of OPEC’s September Monthly Oil Market Report . . . on this graph, the cerulean blue bars represent OPEC’s monthly oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale….

August 2021 OPEC report global oil supply

Even with this month’s 151,000 barrel per day increase in OPEC’s production from what they produced a month earlier, OPEC’s preliminary estimate indicates that total global liquids production decreased by a rounded 30,000 barrels per day to average 95.69 million barrels per day in August, a reported increase which apparently came after July’s total global output figure was revised up by 30,000 barrels per day from the 95.69 million barrels per day of global oil output that was estimated for July a month ago, as non-OPEC oil production fell by a rounded 180,000 barrels per day in August after that revision, with a 370,000 barrel per day drop in the oil output from North America due to Hurricane Ida responsible for the non-OPEC production decrease in August.

After that modest decrease in August’s global output, the 95.69 million barrels of oil per day that were produced globally during the month were still 4.98 million barrels per day, or 5.5% more than the revised 90.71 million barrels of oil per day that were being produced globally in August a year ago, which was the initial month after OPEC and other producers agreed to reduce their output cuts from 9.7 million barrels per day to 7.7 million bpd (see the September 2020 OPEC report (online pdf) for the originally reported August 2020 details) . . . with this month’s increase in OPEC’s output, their August oil production of 26,762,000 barrels per day was at 28.0% of what was produced globally during the month, an increase of 0.2% from their revised 27.8% share of the global total in July . . . OPEC’s August 2020 production was reported at 24,045,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year produced 2,717,000 barrels per day, or 11.3% more barrels per day of oil this August than what they produced a year earlier, when they accounted for 26.6% of global output.

After the modest increase in OPEC’s and modest decrease in global oil output that we’ve seen in this report, the amount of oil being produced globally during the month fell far short of the expected global demand, as this next table from the OPEC report will show us..

August 2021 OPEC report global oil demand

The above table came from page 26 of the OPEC July Oil Market Report (pdf page 36), and it shows regional and total oil demand estimates in millions of barrels per day for 2020 in the first column, and OPEC’s estimate of oil demand by region and globally, quarterly over 2021 over the rest of the table . . . on the “Total world” line in the fourth column, we’ve circled in blue the figure that’s relevant for August, which is their estimate of global oil demand during the third quarter of 2021 . . . OPEC is estimating that during the 3rd quarter of this year, all oil consuming regions of the globe have been using an average of 98.46 million barrels of oil per day, which as you can see in the green ellipse above, is a rounded 0.22 million upward revision from the 98.23 million they had estimated for the 3rd quarter a month ago, which still reflects a bit of coronavirus related demand destruction compared to 2019, when global demand averaged over 101 million barrels per day during the summer . . . but as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world’s oil producers were only producing 95.69 million barrels million barrels per day during August, which would imply that there was a shortage of around 2,770,000 barrels per day in global oil production in August when compared to the demand estimated for the month…