It isn't clear exactly what numbers OPEC President Chalib Khelil is citing, but it was a fairly stark version of supply/demand math he used today, one day before OPEC is to meet in Vienna.
Khelill, who is also the oil minister of Algeria, said a supply overhang of between 500,000 b/d and 1.5 million b/d could build by early 2009. "Everyone agrees that there is going to be an oversupply of between 500,000 b/d and 1.5 million b/d at the end of the year, early next year."
Here's how he may have gotten to those numbers:
--According to Platts data, OPEC produced 32.77 million b/d in July. OPEC itself said the group produced an average of 32.22 million b/d in the second quarter.
--The International Energy Agency is estimating that the call for OPEC crude in the fourth quarter is 31.3 million b/d, and that the figure plunges to 30.3 million b /d in the first quarter.
That math pretty clearly backs up Khelil's projection on the supply/demand balance that OPEC faces. However, Platts reporters in Vienna are reporting that OPEC is widely expected to leave official output targets, set at 29.673
million b/d for 12 of its 13 members, excluding Iraq, unchanged at Tuesday's meeting.
The biggest unknown in all the balances is non-OPEC production, which recently has been forecast by analysts to be growing smartly, only to have those estimates revised downward as the time period in question nears.
Earlier today, Mexico said its crude production and exports are set to drop further next year, to 2.75 million b/d and 1.226 million b/d, respectively, according to the 2009 federal budget sent to Congress Monday by the Finance Ministry. This year through July, Mexico exported 1.443 million b/d, a drop of some 200,000 b/d compared with 2007, according to state Pemex. Crude production through July was 2.845 million b/d, a year-on-year drop of some
150,000 b/d.
It's that sort of shortfall that has always vexed forecasters, and is surely confounding OPEC now.
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