Analys

SEB – Råvarukommentarer, 6 maj 2013

Publicerat

11 år sedan

den

6 maj, 2013

Redaktionen

Rekommendationer

*) Avkastningen avser 1:1 råvarucertifikat där de ingår i rekommendationen. I den aktuella tabellen ovan har jag tagit prisförändringen den senaste veckan sedan det förra veckobrevet publicerades.

Inledning

Jag tror att guld, silver, platina och palladium, liksom olja står inför en korrektion nedåt i veckan som kommer. Om detta sker, kan dock priserna ha kommit ner så pass att det kan bli intressant att köpa dem på lite längre sikt.

Vete och majs har stabiliserat sig i pris på grund av det ovanligt kalla och blöta vädret i USA, som försenat sådden av majs så att den är rekordsen och fått höstvetet att vara i ännu sämre skick. Det har varit onormalt kallt överallt på jorden på ett sätt som avviker kraftigt från vad som var förväntat.

Råolja – Brent

Det var en volatil vecka för oljepriset. 100 dollar på nedsidan och 105 dollar på uppsidan. I fredags med positiv statistik från USA i ryggen försökte marknaden få upp oljepriset över 105 dollar, men det gick inte. Tekniskt ser det ut som om 105 dollar är en bra nivå att sälja på. Men det beror naturligtvis helt på om 105 bryts eller inte. Jag tror inte att marknaden orkar det.

Lagren och lagerförändringarna i USA den senaste rapportveckan ser vi nedan, enligt Department of Energy och American Petroleum Institute. Råoljelagren ökade kraftigt.

Nedan ser vi amerikanska råoljelager enligt DOE i tusen fat. Den svarta kurvan är 2012 års lagernivåer vecka för vecka och den lilla röda linjen är 2013 års nivå.

Importen har ökat och den trend av minskad import vi sett från mitten av förra året ser inte ut att fortsätta i år. De högre råoljelagren vi nämnde ovan, ser vi beror på att man importerade mer.

Vi fortsätter att ligga neutralt för att förhoppningsvis kunna komma in billigare i OLJA S om priset går ner till 100 dollar igen.

Elektricitet

Tekniskt har marknaden bytt mönster från ”bullish” till ”bearish”. Vi väljer därför att gå ur marknaden, i väntan på bekräftelse åt endera hållet.

Naturgas

Naturgaspriset fortsatte, som vi skrev förra veckan, upp mot 4.50 igen. Efter det föll priset abrupt. Det var olyckligt, men på den här nivån tror vi att naturgas är köpvärt igen.

Guld och Silver

Guldpriset har rekylerat färdigt, tror vi. Vi tror att man ska sälja guld nu, därför att vi tror att det kommer ett kursfall till. Det brukar alltid komma två kursfall med en rekyl emellan, när man haft en så kraftig teknisk säljsignal som vi fick i guld i början på april. När det kursfallet är klart tror jag man kan börja köpa guld igen.

Nedan ser vi kursdiagrammet för silver i dollar per troy ounce.

Vi ligger korta guld och silver. Det har kostat i veckan som gick, men eftersom vi tror att det kommer en till vända ner, ligger vi självklart kvar med köpt position i BEAR GULD X4 S och BEAR SILVER X4 S.

Platina & Palladium

Platinapriset har rekylerat uppåt, i likhet med guld och silver. Förra veckan rekommenderade vi att sälja långa positioner i platina. Den här veckan rekommenderar vi köp av BEAR PLATIN X4 S.

Prisfallet i palladium har stannat av och inte lyckats ta sig uppåt. Det ser ännu svagare ut än de andra. Vi rekommenderar köp av BEAR PALLAD X4 S. Målkursen är 600 dollar.

Basmetaller

Vi skrev i förra veckan att prissättningen av derivat indikerade en ökad volatilitet. Det fick vi se med besked under den gångna veckan. Delvis kan det ”skyllas” på tunna marknader p.g.a. ledigheterna kring 1:a maj. Kina hade stängt både måndag och tisdag, och stora delar av Europa under onsdagen (UK däremot öppet och därmed LME). Svagheten från fredagen följdes upp med säljtryck ända fram till torsdagen. Nyhetsmässigt var det främst rundan av inköpsindexsiffror som drev marknaderna. Både Kina och USA:s PMI backade mer än väntat, och ligger nu i båda fallen bara strax över 50-strecket. Marknaden har de senaste veckorna främst oroats för att återhämtningen i USA tappat fart. Effekten av fredagens överraskande positiva arbetsmarknadssiffra blev därför dramatisk. Priserna var redan mycket nedpressade. Fredagen bjöd på kraftiga uppgångar mellan 3 och 5 %. Sett över hela veckan ser det mindre dramatiskt ut, med marginella uppgångar. Undantaget är koppar som är upp 3,9 % på veckan.

Koppar

Som vi skrivit tidigare har vi haft kopparn under bevakning för att gå från neutral till köp. Tekniskt sett (se graf) stängde priset i fredags väldigt gynnsamt. Marknadens oro för USA lättade rejält efter fredagens arbetssiffra, som tyder på att ekonomin är på rätt spår. Många finansiella aktörer har dessutom positionerat sig för nedgång, vilket i sig kan skapa ett behov att köpa tillbaka korta positioner. Det är dock för tidigt att tala om en mer bestående vändning. Det behövs tecken på att Kina också är ”på spåret”. Säsongsmässigt är det nu som Kinas kopparimport ska ta fart, något som inte visats sig (ännu) i statistiken. Vi är positiva till basmetaller generellt, och vi har tidigare beskrivit vikten av att kopparmarknaden stabiliserades för att skapa förutsättningar för hela basmetallkomplexet. Veckans utveckling för koppar bådar därför gott för övriga metaller i veckan som kommer.

Vi förväntar oss fortsatt hög volatilitet. Vår kortsiktiga bedömning talar för uppsidan och vi rekommenderar därför köp av BULL KOPPAR X2 S eller X4 S.

Aluminium

Svagheten i mitten i veckan drabbade aluminium extra hårt och i vårt tycke ”oförtjänt” mycket. Priset fick dock tillfälle att testa nya låga nivåer under $1830, men det blev kortvarigt och köpintresset var massivt på de nivåerna. Vi ser intresse framför allt från industriella aktörer som ”täcker in” framtida konsumtion, men också från långsiktiga investerare som bedömer nivåerna som alltför låga för ett fortsatt ökat utbud. Högkostnadsproducenterna, framför allt i Kina, förväntas minska utbudet om priset långvarigt stannar på nuvarande nivåer. Kina annonserade redan i mars stängningar motsvarande ca 800 tton (att jämföra med ett förväntat globalt överskott på ca 1 milj ton). Fredagens positiva stängning (med hjälp av kopparns starka utveckling) ger grund för en följdrörelse uppåt i början av nästa vecka.

För den riskbenägne kan det vara läge för att köpa ett kontrakt med hävstång (BULL ALU X2 S eller X4 S). Långsiktigt är nivån väldigt intressant för kontraktet Aluminium S (utan hävstång).

Zink

Zinken följde i stort sett övriga metaller under veckan, och får en ganska neutral stängning på veckan. Produktionsstatistik från Kina är lite oroväckande för zinkens fundamentala balans. Smältverksproduktionen ökar i Kina, delvis som en effekt av stort gruvutbud (höjda smältlöner till smältverken). Risken finns att det behövs ännu lägre priser för att påverka gruvutbudet. Risken är att det dröjer innan priset vänder upp på allvar. Vi bedömer ändå zinken som fundamentalt ”billig” ur ett kostnadsperspektiv och nuvarande nivåer är mycket intressanta på lite längre sikt (6-12 månader). I det perspektivet är Zink S (utan hävstång) att föredra.

Nickel

Vi varnade i förra veckan för att det negativa stämningsläget kring nickel skulle kunna pressa marknaden under $15000. I den allmänna svagheten i mitten av veckan, gick det därför ganska lätt. Vi bedömde dock en sådan rörelse som kortvarig. Priset var som hastigast under torsdagen nere som lägst i $14625, vände väldigt snabbt och med hjälp av fredagens arbetsmarknadsstatistik får vi en positiv avslutning på veckan. Tekniskt sett balanserar marknaden på de kritiska nivåerna, och det är för tidigt att tala om en mer bestående vändning. Precis som för koppar är det finansiella kollektivet väldigt ”korta”, d.v.s. det finns ett stort behov att köpta tillbaka tidigare sålda terminskontrakt, som i sig för den volatila metallen nickel, kan skapa utrymme för en uppgång i veckan som kommer. Vi bedömer nivåerna som väldigt intressanta ur ett fundamentalt perspektiv. Högkostnadsproducenterna får problem om priset långvarigt ligger kvar vid nuvarande nivåer. Det har redan rapporterats om produktionsneddragningar i Australien, och det förväntas komma mer. Trots det bedöms marknaden vara i överskott, givet att inte efterfrågan från den rostfria industrin överraskar. Det kan således ta en tid innan vändningen för nickel kommer. Vi bedömer ändå nivåerna som väldigt attraktiva på 6-12 månaders sikt. I det perspektivet är Nickel S (utan hävstång) att föredra.

Kaffe

Kaffepriset (maj 2013) steg i veckan som gick. Förr eller senare kommer kaffepriset att vända uppåt. Den som söker en långsiktig placering i råvarumarknaden och har tålamod, kan säkert tjäna bra med pengar på certifikatet KAFFE S.

Socker

Sockerpriset (september 2013) fortsätter att ligga i fallande pristrend. Ingen skillnad från förra veckan. Socker och kaffe har följt varandra åt under lång tid, men medan kaffet visar lite tecken på trendvändning, ser man inte något alls av det i sockermarknaden. Vi fortsätter med neutral rekommendation.

[box]SEB Veckobrev Veckans råvarukommentar är producerat av SEB Merchant Banking och publiceras i samarbete och med tillstånd på Råvarumarknaden.se[/box]

Disclaimer

The information in this document has been compiled by SEB Merchant Banking, a division within Skandinaviska Enskilda Banken AB (publ) (“SEB”).

Opinions contained in this report represent the bank’s present opinion only and are subject to change without notice. All information contained in this report has been compiled in good faith from sources believed to be reliable. However, no representation or warranty, expressed or implied, is made with respect to the completeness or accuracy of its contents and the information is not to be relied upon as authoritative. Anyone considering taking actions based upon the content of this document is urged to base his or her investment decisions upon such investigations as he or she deems necessary. This document is being provided as information only, and no specific actions are being solicited as a result of it; to the extent permitted by law, no liability whatsoever is accepted for any direct or consequential loss arising from use of this document or its contents.

About SEB

SEB is a public company incorporated in Stockholm, Sweden, with limited liability. It is a participant at major Nordic and other European Regulated Markets and Multilateral Trading Facilities (as well as some non-European equivalent markets) for trading in financial instruments, such as markets operated by NASDAQ OMX, NYSE Euronext, London Stock Exchange, Deutsche Börse, Swiss Exchanges, Turquoise and Chi-X. SEB is authorized and regulated by Finansinspektionen in Sweden; it is authorized and subject to limited regulation by the Financial Services Authority for the conduct of designated investment business in the UK, and is subject to the provisions of relevant regulators in all other jurisdictions where SEB conducts operations. SEB Merchant Banking. All rights reserved.

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Analys

SEB Metals price forecast update

Publicerat

4 dagar sedan

den

30 november, 2023

Redaktionen

Softer economic growth in 2024 calls for somewhat softer metals prices in 2024. Industrial metals prices as well as other commodity prices exploded during Covid-19 as governments around the world unleashed stimuli in the magnitude of 10x of what was done during the global financial crisis in 2008/09. Consumers shifting spending from services to consumer goods added to the boom. Bloomberg’s industrial metals price index was up 91% in March 2022 versus January 2020 because of this. Global manufacturing PMI peaked in May 2021 and has been fading since and below the 50-line from September 2022 with latest reading at 48.8. Industrial metals prices have faded since their peak in March 2022 but are still 30% higher than they were in January 2020. Even zinc, the worst performing metal, is still 9% above where it was in January 2020. As such one could possibly argue that industrial metals have not yet fully faded from their Covid-19 stimulus boom. One possible explanation could be inflation where US inflation is up 19% over the period. But this still leaves industrial metals up 11% in real terms. Another possible explanation is the big jump in energy prices over the period. While coal and gas prices have fallen back a lot, they are still quite high. The coal price in western Europe is 110% above where it was at the start 2020 and 50% above its 2010-2019 average. Most industrial metals are highly energy intensive to produce with digging and crushing of rocks, smelting, and refining of ore. The current aluminium price of USD 2215/ton is for example well aligned with coal prices. In addition to this there has also been significant closures of zinc and aluminium smelting capacity in Europe which probably have supported prices for these metals.

Global economic growth is forecasted to slow from 3.5% in 2022, to 3.0% in 2023 and then again to 2.9% in 2024 as the big jump in interest rates induce economic pain with a lag. Aligned with this we expect lower industrial metals prices in 2024 than in 2023 though only marginally lower for most of the metals. But the field of metals is wide, and the price action is thus adverse. Copper is likely the metal with the most strained supply and with huge needs in the global energy transition.

Aluminium: Prices will likely be depressed versus marginal costs in 2024. Aluminium from Russia is flowing unhindered to the market. Most is going to China for reprocessing and potentially re-exported while some is going to Turkey and Italy. It is all flowing into the global pool of aluminium and as such impacting the global market balance. The LME 3mth aluminium price is currently well aligned with coal prices and both have traded mostly sideways since June this year. Aluminium premiums in the EU have however fallen 30-40% since mid-June in a sign of weakness there. The global market will likely run a surplus in 2024 with depressed prices versus the marginal cost of production.

Copper: Softer fundamentals in 2024 but with accelerating tightness on the horizon. Copper is currently trading at USD 8470/ton and close to 37% above its early Jan 2020 level. The market is expected to run a slight surplus in 2024 followed by accelerating tightness the following years. Downside price risk for 2024 is thus warranted along with softer global growth. The power of Unions is however getting stronger in Latin America with demands for higher salaries. Strikes have broken out in Peru with production at the Las Bambas copper mine at only 20%. Further strikes and disruptions could quickly put the market into deficit also in 2024.

Nickel: Indonesia pursuing market share over price pushing the price down the cost curve. Indonesia’s nickel production is growing rapidly. Its production reached 1.6 million ton in 2022 (+54% YoY) and accounted for close to 50% of total global supply in 2022. Its share looks set to reach 70% by 2030. Lower prices will stimulate demand and will also force higher cost producers to shut down thus making room for the wave of new supply from Indonesia. Prices will be sluggis the nearest years as Indonesia aims for market share over price.

Zinc: Price has stabilized around USD 2500/t. Weakness in global construction will drive prices lower at times in 2024. The 3mth LME zinc price has fallen from a peak of USD 4499/ton in April 2022 to only USD 2248/ton in May 2023. Since then, it has recovered steadily to USD 2500/ton. Demand could struggle in 2024 as construction globally will likely struggle with high interest rates. But mine closures is a natural counter effect of low prices and will put a floor under prices.

Price outlook

Bjarne Schieldrop
Cheif Commodities Analyst
SEB Commodity Research

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Analys

Now it’s up to OPEC+

Publicerat

2 veckor sedan

den

20 november, 2023

Redaktionen

All eyes are now back at OPEC+ after the recent fall in oil prices along with weakening crude curve structures and weakening economic statistics. OPEC+ will have to step up the game and give solid guidance of what it intends to do in 2024. If Saudi Arabia is to carry the burden alone (with only a little help from Russia) it will likely need to keep its production at around 9.0 m b/d on average for 2024 and drop it down towards 8.5 m b/d in Q1-24. This may be too much to ask from Saudi Arabia and it may demand some of the other OPEC members to step up and join in on the task to regulate the market in 2024. More specifically this means Iraq, Kuwait and UAE. The oil market will likely be quite nervous until a firm message from Saudi/Russia/OPEC+ is delivered to the market some time in December.

Bjarne Schieldrop, Chief analyst commodities at SEB — Bjarne Schieldrop, Chief analyst commodities, SEB

Saudi Arabia may get some help from President Joe Biden though as his energy secretary adviser, Amos Hochstein, has stated that the US will enforce sanctions on Iran on more than 1 m b/d.

Brent crude fell 4.6% ydy to USD 77.4/b and over the last three trading sessions it has lost USD 5.1/b. This morning it is trading only marginally higher at USD 77.6/b which is no vote of confidence. A good dose of rebound this morning would have been a signal that the sell-off yesterday possibly was exaggerated and solely driven by investors with long positions flocking to the exit. So there’s likely more downside to come.

In general there is a quite good relationship between net long speculative positions in Brent crude and WTI versus the global manufacturing cycle. Oil investors overall typically have an aversion of holding long positions in oil when the global economy is slowing down. As of yet there are few signs that the global economic cycle is about to turn. Rather the opposite seems to be the case. Global manufacturing fell in October and yesterday we saw US industrial production fall 0.6% MoM while continued jobless claims rose more than expected and to the highest level in two years. This matches well with the logic that the strong rise in interest rates since March 2022 is inflicting pain on the economy with more pain ahead as the effect comes with a lag.

Most estimates are that the global oil market is running a solid deficit in Q4-23. The IEA has an implied deficit in the global oil market of 1 m b/d in Q4-23 if we assume that OPEC will produce 28 m b/d vs. a call-on-OPEC at 29 m b/d. But prices in the oil market is telling a different story with weakening crude curves, weakening refining margins and a sharp sell-off in oil prices.

For 2024 the general forecasts are that global economic growth will slow, global oil demand growth will slow and also that the need for oil from OPEC will fall from 28.7 m b/d to 28.4 m b/d (IEA). This is a bearish environment for oil. The average Brent crude oil price so far this year is about USD 83/b. It should essentially be expected to deliver lower in 2024 with the negatives mentioned above.

Two things however will likely counter this and they are interconnected. US shale oil activity has been slowing with falling drilling rig count since early December 2022 and that has been happening at an average WTI price of USD 78/b. The result is that total US liquids production is set to grow by only 0.3 m b/d YoY in Q4-24. This allows OPEC+ to support the oil price at USD 80-90/b through 2024 without fear of loosing a significant market share to US oil production. Thus slowing US liquids production and active price management by OPEC+ goes hand in hand. As such we do expect OPEC+ to step up to the task.

So far it has predominantly been Saudi Arabia with a little help from Russia which together proactively have managed the oil market and the oil price through significant cuts. Saudi Arabia produced 10.5 m b/d in April but then cut production rapidly to only 9.0 m b/d which is what it still produces. Its normal production is about 10 m b/d.

What has made the situation more difficult for Saudi Arabia is the combination of solid growth in non-OPEC supply in 2023 (+2.1 m b/d YoY; IEA) but also a substantial revival in production by Venezuela and Iran. The two produced 660 k b/d more in October than they on average did in 2022. So the need for oil from Saudi Arabia is squeezed from both sides.

All eyes are now back at OPEC+ after the recent fall in oil prices along with weakening crude curve structures and weakening economic statistics.

OPEC+ will have to step up the game and give solid guidance of what it intends to do in 2024. If Saudi Arabia is to carry the burden alone (with only a little help from Russia) then it will likely need to keep its production at around 9.0 m b/d on average for 2024 and drop it down towards 8.5 m b/d in Q1-24. This may be too much to ask from Saudi Arabia and it may demand some of the other OPEC members to step up and join in on the task to regulate the market in 2024. More specifically this means Iraq, Kuwait and UAE.

The oil market will likely be quite nervous until a firm message from Saudi/Russia/OPEC+ is delivered to the market some time in December.

Saudi Arabia may get some help from President Joe Biden though as his energy secretary adviser, Amos Hochstein, has stated that the US will enforce sanctions on Iran on more than 1 m b/d.

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Analys

More from Venezuela and Iran means smaller pie for Saudi

Publicerat

1 månad sedan

den

24 oktober, 2023

Redaktionen

Production in Venezuela and Iran is on the rise and is set to rise further in the coming months and in 2024. Combined their production could grow by 0.8 m b/d YoY to 2024 (average year to average year). The IEA projected in its latest OMR (Oct-2023) that call-on-OPEC will fall to 28.3 m b/d in 2024, a decline of 0.5 m b/d. This combination would drive implied call-on-Saudi from 10.4 m b/d in 2023 to only 9.1 m b/d in 2024 and as low as 8.6 m b/d in Q1-24 if Saudi Arabia has to do all the heavy lifting alone. Wider core OPEC cooperation may be required.

The IEA is out in the news today projecting peak oil demand this decade with global demand standing at no more than 102 m b/d towards the end of this decade. If so it would imply a call-on-Non-OPEC of only 66.4 m b/d in 2028 assuming that OPEC in general will demand a market share of 30 m b/d + NGL of 5.6 m b/d. The IEA (Oct-23) projects non-OPEC production to average 68.8 m b/d in 2024. That’s already 2.4 m b/d more than what would be sustainable over time if global oil demand is set to peak later this decade. Oil producers in general cannot have a production growth strategy in a peak oil demand world.

The US has decided to lift sanctions towards Venezuela for six months (18 April) as a measure to tempt it to move towards more democratic processes. And if it does, then the lifting of sanctions could continue after the 6 months. A primary opposition election took place this weekend with lawmaker Maria Corina Machado currently holding 93% of the vote count. Venezuela will next year hold a presidential election but fair play seems unlikely with Maduro in charge. The lifting of sanctions allows Venezuela’s PdV to resume exports to all destinations. Bans on new, foreign investments in the oil and gas sector are also lifted though Russian entities and JV’s are still barred.

Venezuela produced 0.8 m b/d in September and indicates that it can lift production by 0.2 m b/d by year and with more rigs and wells by 0.5 m b/d to 1.3 m b/d in the medium term.

Oil production in Iran has been on a steady rise since its low-point of 2.0 m b/d in 2020. Last year it produced 2.5 m b/d. In September it produced 3.1 m b/d, but Iran’s oil minister says production now is at 3.3 m b/d. Iran’s rising production and exports is not about the US being more lenient in its enforcement of sanctions towards Iran. It is more about Iran finding better ways to circumvent them but even more importantly that China is importing more and more oil from Iran.

Production by Iran and Venezuela is recovering. YoY production from the two could rise by close to 0.8 m b/d in 2024. This will lead to a decline in call-on-Saudi oil.

Oil production by Iran and Venezuela — Source: SEB graph and asessments, Blbrg data and news

The IEA estimated in its latest OMR report that call-on-OPEC will fall from 28.8 m b/d in 2023 to 28.3 m b/d in 2024. If all OPEC members except Saudi Arabia produces the same amount in 2024 as in 2023, then the need for Saudi Arabia’s oil (call-on-Saudi) will fall from a healthy 10.4 m b/d in 2023 to a still acceptable 9.9 m b/d in 2024. Its normal production is roughly 10 m b/d.

If however production by Iran and Venezuela rise by a combined 0.5 m b/d YoY in 2024, then call-on-Saudi will fall to 9.4 m b/d which is not so good but still manageable. But if Iran’s oil minister is correct when he says that its current production now is at 3.3 m b/d, then it is not far fetched to assume that Iran’s oil production may average maybe 3.4-3.5 m b/d in 2024. That would yield a YoY rise of 0.6 m b/d just for Iran. If we also assume that Venezuela manages to lift its production from 0.8 m b/d this year to 1.0 m b/d in 2024, then the combined growth from the two is closer to 0.8 m b/d. That would push call-on-Saudi down to only 9.1 m b/d which is not good at all. It would require Saudi Arabia to produce at its current production of 9.0 m b/d all through 2024.

The IEA further estimates that call-on-OPEC will average 27.7 m b/d in Q1-24. If we assume Iran @ 3.4 m b/d and Venezuela @ 1.0 m b/d then call-on-Saudi in Q1-24 will only be 8.6 m b/d. I.e. Saudi Arabia will have to cut production further to 8.6 m b/d in Q1-24. At that point Saudi Arabia will likely need or like other core OPEC members like Iraq, Kuwait and UAE as well as Russia to join in.

Implied call-on-Saudi. Call-on-OPEC is set to decline from 28.8 m b/d to 28.3 m b/d to 2024. If all OPEC members produced the same in 2024 as in 2023 then call-on-Saudi would fall by 0.5 m b/d to 9.9 m b/d. But if Venezuela and Iran increases their combined production by 0.8 m b/d YoY in 2024 then call-on-Saudi falls to 9.1 m b/d.

If we look a little broader on this topic and also include Libya, Nigeria and Angola we see that this group of OPEC members produced 11.4 m b/d in 2010, 10.1 m b/d in 2017 and only 5.1 m b/d at the low-point in August 2020. The decline by these OPEC members has of course the other OPEC and OPEC+ members to stem the rising flood of US shale oil production. The production from this unfortunate group of OPEC-laggards is however now on the rise reaching 7.5 m b/d in September. With more from Iran and Venezuela it could rise to 8.0 m b/d in 2024. Production from Nigeria and Angola though still looks to be in gradual decline while Libya looks more sideways. So for the time being it is all about the revival of Iran and Venezuela.

The unfortunate OPEC-laggards had a production of 11.4 m b/d in 2010. But production then fell to only 5.1 m b/d in August 2020. It helped the rest of OPEC’s members to manage the huge increase in US shale oil production. Production from these countries are now on the rebound. Though Nigeria and Angola still seems to be in gradual decline.

Oil production of some OPEC countries — Source: SEB graph, Blbrg data

What everyone needs to be attentive to is that call-on-OPEC and even more importantly call-on-Saudi can only erode to a limit before Saudi/OPEC/Russia will have to take action. Especially if the forecast for needed oil from OPEC/Saudi for the nearest 2-3 years is in significant decline. Then they will have to take action in the sense that they stop defending the price and allows the price to fall sharply along with higher production. And yet again it is US shale oil producers who will have to take the brunt of the pain. They are the only oil producers in the world who can naturally and significantly reduce their production rather quickly. I.e. the US shale oil players will have to be punished into obedience, if possible, yet one more time.

We don’t think that it is any immediate risk for this to happen as US shale oil activity is slowing while global oil demand has rebounded following Covid-lockdowns. But one needs to keep a watch on projections for call-on-OPEC and call-on-Saudi stretching 1-2-3 years forward on a continuous basis.

In its medium term oil market outlook, Oil2023, the IEA projected a fairly healthy development for call-on-OPEC to 2028. First bottoming out at 29.4 m b/d in 2024 before rising gradually to 30.6 m b/d in 2028. The basis for this was a slowing though steady rise in global oil demand to 105.7 m b/d in 2028 together with stagnant non-OPEC production due to muted capex spending over the past decade. But this projection has already been significantly dented and reduced in IEA’s latest OMR from October where call-on-OPEC for 2024 is projected at only 28.3 m b/d.

In a statement today the IEA projects that global oil demand will peak this decade and consume no more than 102 m b/d in the late 2020ies due to (in large part) rapid growth in EV sales. This would imply a call-on-OPEC of only 26.9 m b/d in 2028. It is not a viable path for OPEC to produce only 26.9 m b/d in 2028. Especially if production by Iran and Venezuela is set to revive. I.e. OPEC’s pie is shrinking while at the same time Iran and Venezuela is producing more. In this outlook something will have to give and it is not OPEC.

One should here turn this on its head and assume that OPEC will produce 30 m b/d in 2028. Add OPEC NGLs of 5.6 m b/d and we get 35.6 m b/d. If global oil demand in 2028 stands at only 102 m b/d then call-on-Non-OPEC equates to 66.4 m b/d. That is 3.1 m b/d less than IEA’s non-OPEC production projection for 2028 of 69.5 m b/d but also higher than non-OPEC production projection of 68.8 m b/d (IEA, Oct-23) is already 2.4 m b/d too high versus what is a sustainable level.

What this of course naturally means is that oil producers in general cannot have production growth as a strategy in a peak-oil-demand-world with non-OPEC in 2024 already at 2.4 m b/d above its sustainable level.

The US is set to growth its hydrocarbon liquids by 0.5 m b/d YoY in 2024. But in a zero oil demand growth world that is way, way too much.