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247 comments on DrumBeat: July 27, 2007

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Darwinian on July 27, 2007 - 9:45am Permalink | Subthread | Comments top

The May issue of the IEA Oil Market Report had world oil production at 85.5 million barrels per day in April. The latest July full market report just came out and they have world oil production at 84.3 mbd in June, down 1.2 mbd in the last two months. They blame the drop in June on maintenance in the North Sea and seasonal factors limiting North American output. But they say not to worry because “non-OPEC supply should rebound in July before maintenance again dents August output.”,

They say output from Saudi was lower in June.

A very interesting admission from this IEA report, from page 16:

Original non-OPEC forecasts for 2005 and 2006 proved
over-optimistic to the tune of 1.0 mb/d-plus, or around 2%. Moreover, OECD supply has consistently
come in below initial forecasts for the past ten years. In part, this derives from a prevailing ‘business as
usual’ methodology, with normal operating conditions and on-schedule project completions assumed until
contrary evidence arises. And while the past twelve months have seen non-OPEC annual growth recover
again to around +1.0 mb/d, large risks remain for the 2007-2012 outlook.

They are saying “we were over-optimistic in the past and we may be a little over-optimistic in our 2007-2012 outlook. The IEA is starting to hedge their bets folks. Can you blame them?

It’s starting to get interesting folks.

To get the latest IEA Oil Market Report click on the link then go to the bottom of the page and click on: “The latest free issue of the full OMR”. It now brings up the July issue instead of the June issue.

Ron Patterson

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Gail the Actuary on July 27, 2007 - 12:07pm Permalink | Subthread | Parent | Comments top

The IEA Oil Market Report is interesting. If I am reading the report right, it sounds like starting in the middle of the second quarter of 2007, they are trying to adjust for the consistent upward bias in some of the non-OPEC numbers. It is hard to understand what they are doing - one place they talk about an adjustment of -410,000 barrels per day; another place they say the adjustment for this month totals -220,000.

Another thing that becomes clear from the report is that the high demand numbers seem to be driven by the transportation sector. The transportation sector shows high demand growth, in country after country.

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Dave Cohen on July 27, 2007 - 1:45pm Permalink | Subthread | Parent | Comments top

Ah! Welcome to the Wild, Wacky, Wonderful World of IEA accounting.

Rule # 1
All numbers, including numbers for years & months gone by, and especially forecasts, are subject to revision at any time. Therefore, every Oil Market Report is just a fleeting snapshot in time.

Rule # 2
Revisions made under Rule # 1 are also subject to meta-revisions without notice should past estimates, even when they've already been revised, be shown to be totally out of touch with reality.

And always remember to have fun! Enjoy yourself!

Hey Ron (above) and Gail, see my latest column Inside the IEA Medium Term Report.

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Mark B on July 27, 2007 - 6:20pm Permalink | Subthread | Parent | Comments top

And they also expect world demand to be 88 mbd in Q4 2007.

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247 comments on DrumBeat: July 27, 2007

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