Analys
SEB – Råvarukommentarer vecka 21 2012
Sammanfattning: Föregående vecka
Brett råvaruindex: -1,75 %
UBS Bloomberg CMCI TR Index- Energi: -1,12 %
UBS Bloomberg CMCI Energy TR Index - Ädelmetaller: -2,22%
UBS Bloomberg CMCI Precious Metals TR Index - Industrimetaller: -0,98 %
UBS Bloomberg CMCI Industrial Metals TR Index - Jordbruk: -3,09 %
UBS Bloomberg CMCI Agriculture TR Index
Kortsiktig marknadsvy:
- Guld: Neutral/köp
- Olja: Sälj
- Koppar: Sälj
- Majs: Sälj
- Vete: Neutral
Guld
Guldet föll 1,9 procent under veckan. För första gången på länge ser vi ett betydande utflöde ur fysiska guld ETF: er. Samtidigt kan nämnas att under samma period som guldpriset sjunkit 20 procent sedan toppen 2011 har innehaven i världens största ETF, SPDR, stigit med tre procent.
Efterfrågan på guldsmycken i Indien förväntas sjunka för tredje kvartalet i rad efter att rupien försvagats till rekordlåg nivå mot dollarn.
Greklands f.d. premiärminister Papademos sa i veckan att det finns en betydande risk för att landet kommer att lämna euro-samarbetet. EU:s ledare blir allt mer medvetna om att försöken att rädda kvar Grekland i euron håller på att misslyckas. Helst ser man att Grekland behåller euron, så den politiska viljan finns, men fortsatt stöd förutsätter att Grekland följer överenskommelser om budgetmål. Allt görs nu för att få de grekiska väljarna att förstå att de i valet den 17 juni i praktiken kommer att rösta om euromedlemskapet snarare än om fortsatta åtstramningar. Guldet har alltså fortsatt stöd av Eurozon stress.
Skolbokens gamla ”sanningen ”ökad finansiell oro – guldpriset stiger”, ter sig alltmer avlägsen.
Den starkare dollarn har också bidragit till prisfallet i guld. Euron har letat sig ned mot den svagaste nivån mot dollarn sedan sommaren 2010.
Teknisk analys: Som tidigare gäller att så länge inte C vågens botten, 1521, bryts ligger vi i startblocken för nästa uppgångsfas. Givet närheten till huvudstödet krävs en noggrannare bevakning. Dessutom anser vi att nuvarande läge är ett intressant köptillfälle för den mer spekulativt lagde. Ett köp på nuvarande nivå med en stopp loss under 1521 ger också en angenäm chans/riskprofil, om man är positiv till guldet dvs.
Olja
Oljan backade 0,29 procent och spekulativa långa positioner föll till fyra månaders lägsta. Oljan befinner sig fortfarande i en ”soft spot” pga. överproduktion (Saudiarabien försöker pressa ner oljepriset för att öka trycket på Iran) och ett negativt makrosentiment.
Chefen för International Atomic Energy Agency (IAEA) har sagt att han förväntar sig att teckna ett avtal med Iran om att få inspektera landets kärnenergianläggningar. Onsdagens möte i Bagdad där Iran och FN:s sex permanenta medlemmar i säkerhetsrådet + Tyskland möttes blev tämligen resultatlöst och resulterade främst i en sammanfattning av läget och inget nytt för framtiden. Förhoppningar fanns om en lösning på Irankonflikten efter mötet i Bagdad. Enlig API steg råoljelager med 1,5 miljoner fat och är nu på den högsta nivån sedan 1990.
Enligt onsdagens statistik från DOE steg råoljelagren med 0,8 miljoner fat.
Enligt SEB:s analytiker kommer överskottet på olja att minska redan under det tredje kvartalet i år när efterfrågan ökar säsongsmässigt.
Orkansäsongen i USA börjar nu återigen utgöra ett hot mot oljeproduktionen i Mexikanska golfen.
I USA är det långhelg och Memorial Day firas på måndag och inleder amerikanska ”driving season” vilket vanligtvis leder till en ökad efterfrågan på drivmedel. På kort sikt anser vi emellertid att mycket talar för ett fallande oljepris.
Teknisk analys: I och med brottet av 233dagars medelvärdet utlöstes en ny medelsiktig säljsignal. Sedan dess har marknaden fortsatt att falla ned till 105.15-stödet där i alla fall en mindre rekyl bör uppkomma. Väl avklarad (sälj tillfälle) ska marknaden fortsätta falla ned emot 100/101 området där nästa huvudstöd återfinnes.
Koppar
Kopparpriset föll 0,44 procent under veckan och handlade som lägst på 7500 dollar. Spekulativa långa positioner föll till ringa fem tusen kontrakt. Positiva data från amerikansk husförsäljning påverkade inte kopparpriset. Försäljningen steg till en säsongsjusterad pristakt på 343 000 enheter vilken var mer än vad analytiker räknat med.
Igår påvisade kinesiskt preliminärt inköpschefsindex för tillverkningsindustrin för maj, ett index som HSBC publicerar, en kontraktion till 48,7 från 49,3 i april. Tillverkningsindustrin gick tillbaka mot bakgrund av svagare export. Kopparn faller i takt med den europeiska krisen eftersom Europa är Kinas största handelspartner
I Kina fortsätter fastighetspriser att falla. Enligt premiärminister Wen Jiabao kommer Kina fokusera framöver på att öka fokus på tillväxt igen. Detta skulle innebära en lättad penningpolitik, något som är positivt för koppar men på kortsikt är osäkerheten stor och vi tror att priserna kan sjunka något ytterligare.
Världsbanken sänkte utsikterna för Kinas BNP till 8,2 procent 2012 från 9,2 procent 2011. Siffran är högre än Kinas egen prognos som hamnade på 7,5 procent. Landet är nu på väg mot ett sjätte kvartal med fallande tillväxt.
Kopparn har fått visst stöd av uttalande från Codelco, som bekräftade att produktionen under första kvartalet är 10 procent lägre jämfört med förra året p.g.a. låga metallhalter i malmen.
Rykten säger att JP Morgan ska lansera en ETC med fysiskt koppar som underliggande vilket skulle kunna driva upp priset. Samtidigt har vi noterat att produkter med fysiska industrimetaller (alltså inte terminskontrakt) inte varit en kommersiell framgång än så länge.
Teknisk analys: Marknaden har nu också brutit under 7885 stödet och därigenom utlöst ytterligare försäljningar. Vi kan inte se annat än att fortsatt nedgång är att vänta och att vi härnäst tar sikte på nacklinjen, 6940, på den stora huvud skuldra topp formationen.
Majs
Även jordbruksprodukterna drogs med ner av det negativa marknadssentimentet och krisen i Europa.
Majspriset föll 7,5 procent under veckan efter prognoser om nederbörd vilka gett förhoppningar om att den nyplanterade amerikanska skörden kommer att bli god. USA är världens största producent och konsument av majs.
Fokus är på väderförhållanden de närmaste veckorna och enligt Global Weather Monitoring förväntas regn i flera amerikanska delstater där man odlar majs vilket alltså är behövligt och positivt för skörden.
Enligt USDA var 77 procent av amerikansk majs i ”good or excellent condition” den 20:e maj vilket är den högsta nivån sedan 2007. Sådden i USA är nu i princip avklarad, rekordtidigt. Kortsiktigt står vi fast vid vår negativa syn men skulle torkan istället hålla i sig är det onekligen ett riskmoment.
Teknisk analys: Reaktionen från botten in kanalen renderade en mycket kraftig studs, vilken, i alla fall kortsiktigt, förhindrat det potentiella ras vi tidigare varnat för. Dock gäller även framgent att dessa kraftiga svängningar gör kortsiktiga vyer utmanande varför vi rekommenderar stor försiktighet och en mer eller mindre neutral vy.
Vete
Vi har sett stora rörelser i vetemarknaden och vetepriset föll 1,16 procent under veckan som gått.
Föregående veckas prisuppgång berodde på torrt väder i Ryssland och USA. Det är även torrt i Kina, Europa och Ukraina. Den långdragna torka som varit hotar att orsaka en sämre skörd än förväntat. Matifvetet med novemberleverans steg med tio procent på rapporterna.
Nu innehåller nya prognoser regn i USA och Europa (även om t ex Tyskland, utom de södra delarna, blir utan regn) vilket fått vetepriset att falla tillbaka. Egentligen borde risken för torka avta eftersom omfattande väderstörningar (ENSO) är neutrala och onormala väderförhållanden (La Niña- Sydostasien och Oceanien får betydligt mer nederbörd än vanligt medan delar av Sydamerika får torka) borde klinga av.
Regn förväntas nu även i Ryssland och Ukraina vilket förbättrar förutsättningarna för skörden även där.
Kvalitén för höstvetet i USA, som rapporterades i måndags, ligger på 58 procent “good /excellent” och det är två procent lägre än förra veckan. Kvalitén har alltså fallit under 60 procent “good/excellent”. Det är en nedrevidering på veckobasis men betydligt bättre än förra årets siffror.
Skörden av höstvete är nu redan klar i Louisiana, vilket är rekordtidigt. Skörden är väsentligt mindre än förväntat.
Frågan är om priset på Matif vetet kommer att falla tillbaka i spåren av mer nederbörd, eller kommer nya rapporter om torka att få priset att vända uppåt. Vi förhåller oss neutrala till vetet under kommande vecka.
Teknisk analys: Den senaste uppgången (som tog sin början ifrån strax ovanför 233dagars bandet) gick lite väl fort varför vi nu befinner oss i en kortare konsolidering. Väl avslutad, vilket vi tror att den redan kan vara, bör vi se marknaden åter stiga upp till nya toppar (och till slut också kliva upp över toppen från förra våren).
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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.
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Analys
SEB Metals price forecast update

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
Analys
Now it’s up to OPEC+

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.

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.
Analys
More from Venezuela and Iran means smaller pie for Saudi

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.

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.

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.

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