Nigeria’s Rig Count Increases by One, as OPEC’s Declines by 18

-By Gideon Osaka

Nigeria’s rig count for the month of June increased by one having recorded nine as against eight recorded in May. This is coming at a time the Organisation of Petroleum Exporting Countries, OPEC posted a minus 18 rig count having recorded 455 in June as against 473 recorded in May, latest data from OPEC shows.

World rig count also suffered a decline of 103, having posted a figure of 1,232 in June as against 1,335 posted in May. Among OPEC members, Algeria led the gainers’ pack as it witnessed an increase of two, having posted a figure of 29 in June as against 27 posted the previous month. This was followed by Libya which had an increase of one as it witnessed a rig count of 12 in June, as against 11 witnessed the previous month. Iraq led the losers’ pack as it had minus 10 having shown a rig count of 41 in June as against 51 shown the previous month. It was closely followed by Saudi Arabia which has minus nine as it recorded 100 as against 109 recorded within the period under review. Kuwait had minus two, as it recorded 50 against 52 recorded within the period under review, while Venezuela had minus one, as it posted a figure of one in June, as against two posted the previous month.

Six OPEC members had their rig count unchanged within the period under review. They are Angola, Congo, Equatorial Guinea, Gabon, Iran and United Arab Emirates(UAE), which recorded 0,0,2,0,157 and 54, respectively. The United States of America had a huge minus of 74, as its rig count in June showed 274, as against 348 recorded in May, while Canada had minus five, having recorded 18 in June, as against 23 recorded the previous month.

WORLD OIL SUPPLY
OPEC data also indicated that global liquids production in June decreased by 2.95 million barrels daily, mb/d to average 86.29 mb/d, compared with the previous month. Non-OPEC liquids production (including OPEC natural gas liquids, NGLs) decreased in June by 1.06 mb/d compared with the previous month to average 64.02 mb/d, lower by 5.67 mb/d year-on-year.

Preliminary declines in production during June 2020 were mainly driven by OECD, by 0.88 mb/d m-o-m, while oil output declined by 0.18 mb/d in non-Organisation of Economic Co-operation and Development, OECD countries, including participants in the Declaration of Co-operation, DoC, because production had already been adjusted in May. The share of OPEC crude oil in total global production decreased by 1.3 pp to 25.8 percent in June compared with the previous month.

WORLD OIL DEMAND
World oil demand in 2020 is estimated to drop by 8.9 mb/d, adjusted up by 0.1 mb/d from last month’s MOMR, according to OPEC. The upward revision reflects slightly better-than-expected oil demand from the OECD region in 2Q20, which more than offset downward adjustments to non-OECD oil demand during the same quarter, mainly due to weaker-than-expected data from the Other Asia region.

Oil demand growth in the OECD region was revised higher by around 1.0 mb/d for the year, and by approximately 0.3 mb/d in 2020. The upward adjustment was mainly the result of better-than-expected data for diesel in OECD Europe and Asia Pacific, as well as for petrochemical feedstock in OECD Americas. Oil demand growth in the non-OECD region was revised lower by 0.2 and 0.4 mb/d in 1Q20 and 2Q20, respectively — around 0.1 mb/d on average for 2020, mainly accounting for weaker-than-expected demand in the Other Asia region (including India, Indonesia, Thailand and Singapore) during 1H20. Weakness in manufacturing activities and the transportation sector was greater than expected in those countries, hence the reduction in industrial and transportation fuels was larger than anticipated. Total global oil demand is estimated at 90.7 mb/d in 2020, with higher demand expected in 2H20 compared with 1H20. In 2021, oil demand is projected to partially recover from the downturn exhibited in 2020 and still register historically high growth of around 7.0 mb/d y-o-y. Total liquids demand is projected to reach 97.7 mb/d in 2021. The demand for oil is estimated to see significant developments, however, it will remain far below pre-COVID-19 levels. Encouraging improvements in economic momentum compared with the current year, in addition to a large drop in the 2020 baseline, are assumed to be the driving factors behind increasing demand in 2021.