I'm posting this link:
- for the archives; some nice data points.
But other than that, I'm having a little trouble understanding the significance.
The headline seems confusing, but, then, the whole introductory paragraphs are confusing:
A new survey from Argus showed on Friday that OPEC+ production fell
to 38.29 million bpd last month—1.81 million barrels per day short of
its reduced quota.
The 19 OPEC+ members subject to the quota
produced 310,000 bpd fewer barrels in November when compared to the
month prior. But that’s still 1.81 million barrels per day short of its
quota for November. November’s quota was a reduction of 2 million
barrels per day off October levels, although it was understood at the
time that the group might not be able to reach even that reduced target.
Trying to figure this out:
September 5, 2022, meeting:
- production quota to be reduced by 100,000 bopd in October, 2022
- mark the alliance's first reduction in output targets in 22 months and
return quotas to August levels, when OPEC's 13 members aimed to pump
26.689 million b/d, while Russia and eight other partners committed to
15.414 million b/d, for a combined ceiling of 42.103 million b/d.
- in practice, however, with the bulk of OPEC+ countries already struggling to reach their quotas, not much supply will be lost.
October 5, 2022, meeting:
- a cut of a whopping two million bopd in November with no expiration date
- if in September, the combined ceiling was 42.103 million bopd, a cut of two million bopd in November, the ceiling would go to 40.1 million bopd (or thereabouts)
From today's article:
- OPEC+ production fell to 38.29 bpd in November
- that production = 1.81 million bopd short of what OPEC+ had allowed themselves to produce
- meaning the November combined ceiling must have been (38.29 +1.81) = 40.1 million bopd
The production numbers broken down:
- OPEC’s crude production was down 770,000 bpd for November, a
six-month low. The production declines were led by Saudi Arabia, which
saw its output reduced by 440,000 bpd.
- The biggest laggards among
the broader OPEC+ group now, according to Argus, are Russia, producing
670,000 bpd under target; Nigeria, producing 530,000 bpd under target,
Angola, producing 350,000 bpd under target, and Malaysia, producing
170,000 under target.
Despite all these cuts, the price of oil still plummeted this week.
The December 5th meeting: no change. Waiting to see what the December 5th sanctions would do.
****************************************
Why Is The Price Of Oil Plummeting?
Two reasons:
This chart:
And, what isn't being said: the Europeans have said enough is enough and have established a cap: $60 / bbl. And that cap will spread to Asia.
In the 1980's we had an OPEC embargo. It looks like we have the reverse, a "price embargo." Asia is demanding a significant price cut from Russia for taking "the risk of buying sanctioned oil"; and, in fact, Russia's most important oil, Urals, is trading for $43 / bbl in Asia.
This tells me the the current price for WTI at $70 / bbl is at significant risk for at least another $10-haircut, as they say.
