Analys

SHB Råvarubrevet 6 juni 2012

Publicerat

11 år sedan

den

8 juni, 2012

Redaktionen

Råvaror Allmänt

Energi: Neutral
Basmetaller: Neutral
Ädelmetaller: Negativ
Livsmedel: Neutral

En händelserik vecka ligger bakom oss och en händelserik helg ligger framför oss. Kina släpper majdata för inflation, industriproduktion och handelsdata, vilken inkluderar import av olika råvaror.

Under veckan sänkte Kina räntan för första gången sedan 2008. Det gav marknaden farhågor om att helgens data kommer visa på en allt sämre kinesisk konjunktur som behöver ytterligare stimulanser för att komma på fötter. Räntesänkningen indikerar att de tidigare sänkningarna i reservkraven inte gett önskad effekt och att efterfrågan på pengar kanske är ett större problem än utbudet på pengar.

Chefen för amerikanska centralbanken, Bernanke svävade på målet kring framtida amerikanska stimulanser vilket fick marknaden att vekna och guldet såldes av. Under veckan fick också Spanien sänkt kreditbetyg och sex tyska banker fick en släng av samma slev.

Bottenfiske brukar löna sig men före vi rekommenderar köp på bred front i råvaror vill vi se tydliga tecken på att kinas konjunktur har bottnat ut och att den fundamentala råvarumarknaden får stöd av att lagercykeln i Kina ska fyllas på. I det korta perspektivet är det fortfarande investerares sentiment som styr marknaden. Det gör den nyckfull och svår.

Energi (neutral)

Elmarknaden handlas i stort sett oförändrat över veckan där våta väderprognoser och låga spotpriser fortsatt tynger utvecklingen. Inga rörelser inom bränslekomplexet som påverkar elmarknaden i någon större utsträckning, fossila bränslen och energikol i synnerhet är under press och med en förväntat stark utveckling på dollarn har vi svårt att se hur kolet ska stiga på kort sikt. Utsläppsrätter och kontinentala marknader ger inte heller de någon riktning utan fokus förblir på väderprognoserna. De senaste körningarna pekar på ett scenario med nederbörd om närmare 7-8 TWh vilket i så fall skulle förbättra energibalansen med ytterligare 3 TWh.

Kvartalet Q4 2012 som från och med denna vecka är underliggande för SHB Power Index handlas på 37.65 euro mot slutet av veckan vilket får ses som förhållandevis lågt om man tänker på att kontraktet omfattar ett antal vinterdagar där det alltid finns risk för kyla och bortfall av kärnkraftskapacitet som kan dra upp spotnivåerna. Vi har dock svårt att se hur kontraktet skall stiga på kort sikt när de flesta faktorer pekar fortsatt ned och marknaden fastnat i en range. Med andra ord kan det vara klart intressant för den som kanske vill prissäkra de lite längre kontrakt men mindre intressant för den som vill gå in i ett hävstångscertifikat just nu eftersom man sannolikt behöver sitta på det en längre tid innan vi lyckas bryta ur dessa nivåer.

Basmetaller (neutral)

Det har varit en händelserik vecka för basmetallerna som startade veckan med två dagar där LME höll stängt. Sedan fick vi se uppgångar efter Kinas räntesänkning som sedan raderades efter Bernankes tal. Aluminium och koppar har haft samma rörelsemönster som övriga metaller under veckan med både upp och nedgångar men stänger veckan i princip oförändrad. Aluminium lagret i Shanghai steg för första gången på 5 veckor med 915 ton till 320 495 ton. Samtidigt föll lagret på LME med 11 175 ton till 4,86 miljoner ton. Fallande lager på LME ger stöd till priset som pressas i en marknad som denna. Värt att notera är att nickel går mot strömmen och steg med nästan 1,5 % under fredagens handel. Nickel, 3-månaders på LME handlas i skrivande stund på 16840 USD/ton vilket är 4% högre än öppningen i onsdags. Priset får stöd av bland annat fallande lager på LME som på tre dagar sjönk med 2,3 %.

Ädelmetaller (Negativ)

Upp som en sol, ner som en pannkaka

Förra fredagen steg guldpriset med drygt fem procent efter usla amerikanska jobbmarknadssiffror, och vi fick uppleva ett kort ögonblick av guldets klassiska ”säker hamn”-funktion. En händelselös vecka har därefter gjort att ädelmetallerna legat still större delen av veckan, fram till att USA:s centralbankschef Ben Bernanke talade inför kongressens finansutskott. Avsaknad av tydlighet gjorde att marknaden sålde guld igen, och större delen av förra fredagens uppgång är nu utraderad.

Vi hoppas att nästa vecka bjuder på mer spänning på guldfronten än den vecka som nu gått, och vi behåller vår negativa vy på sektorn.

Softs och livsmedel

50 % risk för El Nino senare i år enligt rapporter från US Weather Center. El Nino är ett ett av de mest kraftfulla återkommande klimat och hydrologiska fenomen i Stilla Havet, och innebär i korta drag förändringar i tryckförhållandena i atmosfären, vilket leder till att passadvindarna försvagas och ändrar riktning vilket påverkar havsströmmarna. Normalt är ytvattnet i Stilla Havet ca 8 grader kallare utanför Ecuadors och Perus kuster än vad det är utanför Indonesien och Australien, El Nino skulle vända på dessa förhållanden. El Nino skulle medföra torka i sydöstra Asien och Australien samt översvämningar i Sydamerika. Senast El Nino orsakade stor skada var 1998, fler än 2000 personer omkom, och skadorna på skördar och gruvor var omfattande. El Nino påverkar även orkansäsongen i Atlantområdet (färre till antalet) och meteorologer har redan estimerat färre kraftiga orkaner (jämfört med året innan) för säsongen som startade 1 juni och pågår till sista november. National Oceanic and Atmospheric Administration förutspår 9-15 tropiska stormar under årets säsong varav 4-8 kan utvecklas till orkaner och av dessa 1-3 till kraftiga orkaner (kategoriserat 3:or på Saffir-Simpson
skalan).

Men, atlantområdet har redan namngivit två orkaner innan säsongen påbörjats, Alberto och Beryl. Alberto var den tidigaste Atlantstormen sedan 2003.

Vete

Rapporter om torrt väder, främst i USA och Ryssland, har drivit upp priserna på vete under veckan. Novemberkontraktet på matif har stigit med 1,7 % och på Chicagobörsen har decemberkontraktet 2012 stigit med 1,2 %. Det varma och torra vädret ser ut att fortsätta i USA, dock med någon lätt nederbörd som kan ses som positivt för vetet. Torka med fortsatt höga temperaturer fortsätter även i Ryssland, även om det ser ut att komma en del regn behövs mer nederbörd. Skörden i USA är igång och ligger långt fram jämfört med normalt, vilket fick priset att falla tillbaka något under fredagen. Situationen just nu gör marknaden svårbedömd och vi håller en neutral vy.

Majs

Terminspriset på majs har likt vete stigit under veckan, upp dryga 5 % för det närmaste kontraktet. Vädersituationen för de majsproducerande regionerna ser även de torra ut men prognoser visar på regn till nästa vecka i flertalet regioner vilket talar för en bättre skörd. Vi ser därför fallande priser under fredagen.

Sojabönor

Sojapriserna i Chicago har även de stigit i veckan, novemberterminen har stigit med 5,3 %. Idag rapporterar USDA (U.S. Department of Agriculture) att USA sålt 410 000 ton sojabönor till Kina och ytterligare 120 000 ton till Egypten.

Socker

Regn i Brasilien, handeln inför Ramadan och en svagare valuta (Real) har fått priset på socker att stiga under veckan. En kallfront passerar Brasilien och har medfört kraftig nederbörd vilket dels har påverkat skörden men även lastning av råvaran. Flertalet sockerproducenter har stoppat skörden de senaste dagarna och mängden socker som inväntar export i landets hamnar ökade med 37 % under veckan som gick. Totalt 2 197 millioner ton socker finns lagrat i hamnarna av vilket ca 20 % (430 250 ton) har Kina som destination. Hur mycket den senaste tidens regn påverkar volymen på Brasiliens totala skörd är fortfarande oklart.

Kakao

Afrika stod för nästan 75 % av världens kakaoproduktion förra året. Ghana och Elfenbenskusten producerade bägge rekordskördar 2011/12, vilket kan komma att ändras på i framtiden. Nanga Coulibaly, Alliance of Cocoa Producing countries generalsekreterare uttalade sig i veckan om utsikterna för Afrikas framtid som kakaoproducent. Ett globalt väderskifte skapar på sikt mer torka i Afrika vilket inte är gynnsamt för kakaoproduktionen. De regnperioder man tidigare kunnat räkna med i området är inte längre lika självklara, och flertalet afrikanska producenter rapporterar ovanligt långa perioder av torka i år, vilket får International Cocoa Organisation att rapportera 12 % lägre produktion än säsongen 2010/11. Stora delar av Afrikas kakaoträd behöver bytas ut p.g.a. ålder, d.v.s . oberoende av ändrade väderförhållanden, träden producerar inte tillräckligt eller är mer mottagliga för diverse sjukdomar som kan påverka totala skörden. Detta innebär en merkostnad för producenterna vilka även fått sina inkomster reducerade till följd av de rådande låga priserna. Låga inkomster i landet har fått flertalet unga att söka jobb i städerna och underskottet på unga kakaoproducenter är stort. Flere Afrikanska länder har insett problematiken i detta och har påbörjat åtgärdsplanering.

Kaffe

Världens största kaffeproducent Brasiliens valuta Real fortsätter att vara svag gentemot dollarn vilket har genererat en högre exportvolym och större utbud på den internationella marknaden. Priset på kaffe fortsätter på låga nivåer och Arabica terminerna har fallit tillbaka med över 30 % i år. Globala kaffeproduktionen har reviderats upp för säsongen som påbörjats i oktober. Globala kaffekonsumtionen steg 1,7 % under 2011 vilket är något under snittet för de senaste 12 åren, enligt International Coffee Organization. All Japan Coffee Association rapporterar något lägre lagersiffror, april ner 2,4 % jämfört med mars och med andra ord andra månaden i följd som japanska kaffelagren minskar.

Handelsbankens Råvaruindex

Handelsbankens råvaruindex består av de underliggande indexen för respektive råvara. Vikterna är bestämda till hälften från värdet av global produktion och till hälften från likviditeten i terminskontrakten.

[box]SHB Råvarubrevet är producerat av Handelsbanken och publiceras i samarbete och med tillstånd på Råvarumarknaden.se[/box]

Ansvarsbegränsning

Detta material är producerat av Svenska Handelsbanken AB (publ) i fortsättningen kallad Handelsbanken. De som arbetar med innehållet är inte analytiker och materialet är inte oberoende investeringsanalys. Innehållet är uteslutande avsett för kunder i Sverige. Syftet är att ge en allmän information till Handelsbankens kunder och utgör inte ett personligt investeringsråd eller en personlig rekommendation. Informationen ska inte ensamt utgöra underlag för investeringsbeslut. Kunder bör inhämta råd från sina rådgivare och basera sina investeringsbeslut utifrån egen erfarenhet.

Informationen i materialet kan ändras och också avvika från de åsikter som uttrycks i oberoende investeringsanalyser från Handelsbanken. Informationen grundar sig på allmänt tillgänglig information och är hämtad från källor som bedöms som tillförlitliga, men riktigheten kan inte garanteras och informationen kan vara ofullständig eller nedkortad. Ingen del av förslaget får reproduceras eller distribueras till någon annan person utan att Handelsbanken dessförinnan lämnat sitt skriftliga medgivande. Handelsbanken ansvarar inte för att materialet används på ett sätt som strider mot förbudet mot vidarebefordran eller offentliggörs i strid med bankens regler.

Relaterade ämnen:handelsbanken analys

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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.