DAILY ENERGY REPORT
Call on OPEC, US oil inventories, China’s crude imports, protests in Angola, US power consumption, China’s search for mineral and energy resources, and more
CHART OF THE DAY: Do You Believe OPEC or the EIA?
Summary:
Figure (1) above shows OPEC’s and the US Energy Information Administration’s estimates of the “call on OPEC” (orange and green lines respectively). It also shows OPEC’s actual production in the first two quarters of 2023. As readers can see, the divergence between the two views is significant, mainly because the EIA forecasts lower demand growth and significantly higher non-OPEC production.
EOA’s Main Takeaway:
The question about OPEC’s next move on production cuts, especially Saudi Arabia with its additional 1 mb/d voluntary reduction, has become an extremely important question. If OPEC’s forecast is correct, then the Saudi voluntary cut will end soon. As we discussed in previous reports, OPEC has no choice but to increase production in Q4 2023 due to global oil demand. Meanwhile, and if the EIA forecast is correct, then the Saudi voluntary cut should be renewed until the end of the year.
We believe that both scenarios are inflated. In our view, the “call on OPEC” is between these two extremes, which means that Saudi Arabia does not need to extend the cut beyond July.
All the above views assume no recessions in Europe or the US, but they will have to be revised if the situation changes later in the year.