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What JODI Tells Us About Crude Oil Production

Oil market traders often deal with contrasting sources of information in their efforts to find real production numbers and gain hints of where prices may be headed. Another case in point is the release of August production and intake data by the producer-consumer energy dialogue, known as the Joint Data Initiative (JODI).

The initiative prides itself on offering “high quality and transparent data,” but does not enjoy the long history and the frequent references of other providers such as the International Energy Agency (IEA) and OPEC.

The disparities that crystallize when charting these data points with those from the IEA and OPEC, for example, indicate ongoing ambiguity about who is really pumping how much oil.

The July-August 2011 data series for Saudi Arabia and Venezuela illustrate the situation.

Saudi Arabia's oil production in barrels per day (bpd):

July 2011August 2011Difference
JODI9.606m9.756m+0.150m
OPEC9.657m9.708m+0.051m
IEA9.700m9.800m+0.100m
Range 0.094m0.092m+0.099m

Although indicated gains by various agencies do not exceed a range of 100,000 bpd, the base production numbers stretch further, in the case of Venezuela almost 340,000 bpd.

Venezuela's oil production in barrels per day (bpd):

July 2011August 2011Difference
JODI2.781m2.762m-0.019m
OPEC2.442m2.425m-0.017m
IEA2.630m2.610m-0.020m
Range 0.339m0.337m0.003m

Meanwhile, according to JODI data, Kuwait exported some 1.905 million barrels per day in August, an increase of 200,000 bpd versus July.

Other highlights of the latest JODI update, which relies on voluntary survey data contributions, include the absence of numbers from the UAE and Iran.

Attempts to Address Domestic Demand in Saudi Arabia

Over the summer economists repeatedly told CNBC that rising domestic demand could corner Saudi Arabia’s “power to provide” global oil markets in the future. JODI data for August shows that domestic demand in the Kingdom came in at 1.79 million bpd, an almost 12 percent increase from July. It nonetheless marks a clear decrease of 75,000 bpd compared to a year earlier.

In its monthly report, Riyadh-based Jadwa Investment underscored that “domestic consumption over the first seven months of the year is down slightly on the same period of 2010, lifting the proportion of total production that has been exported.”

In a drive to reduce Saudi Arabia’s dependency on oil to meet growing domestic demand for electricity, authorities are increasingly focusing on new sources of gas and developing alternatives.

Deutsche Bank , in its latest research note, forecast that Middle East oil-producing countries will add 5m bpd of refining capacity by 2018 to meet fuel demand. This as the IEA Chief Economist Fatih Birol said around 90 percent of the growth in oil supply in the next ten years will need to come from the region.

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