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Oil markets in 2013 and beyond

Oilfield Technology,

Last year, US crude oil production increased by 1 million bpd for the fifth year in a row. Shifting production patterns and a continued rise in emerging economies’ share of global demand are what is changing the pattern of crude oil and refined products trade flows around the world.


Crude oil production in the US rose to its highest level in 24 years, exceeding net imports of crude oil in several weeks for the first time in nearly 20 years. The bottleneck that existed in Cushing, Oklahoma has been alleviated by the expansion of pipelines and railroad infrastructure which facilitated the movement of production and refining centres. More light sweet crude is now able to flow directly from production points to the coasts, US importers of light sweet crude oil were displaced by new production from the Bakken, Permin and Eagle Ford tight oil formations. As a result of these shifts, US Gulf Coast crude oil grades fell to record discounts to international benchmarks in November and December last year.

Liquid fuels

Global liquid fuels production growth in 2013 was dominated by the US and Canada where production rose by 1.5 million bpd, when the global figure fell by 800 000 bpd. Several countries outside of America saw production increase but widespread disruption in several key OPEC member countries brought global levels down as a whole. The largest production growth out of North America happened in Russia which added 100 000 bpd.

Unplanned disruptions

At the start of November 2013, unplanned disruptions of global crude oil production reached nearly 3.5 million bpd, over 1 million bpd above their average level during the first quarter of 2013. The price effect of these disruptions was thankfully modest compared to other disruptions of similar volume as the rising production in North America and elevated production in Saudi Arabia continued past the summer peak. Yet, last year, spare global production capacity reached its lowest level since 2008 in August. Libyan outages also overlapped with seasonal maintenance lows which exacerbated things further.

Global demand

Lat year total liquids fuel consumption by countries outside the OECD almost surpassed that of non-OECD member countries for the first time, but it has been much anticipated. OECD member demand grew slightly in 2013, reversing the downward trend seen in six out of the previous seven years. Over the same period, non-OECD demand rose by 1.1 million bpd and China alone accounted for almost 35% of the global demand growth, eclipsing the US to be come the world’s largest importer of crude oil.


This year, the EIA expects US crude oil production to rise by a further 1 million bpd. The anticipated US production growth along with the possible return of Libyan supply and Iraqi production plans means that global balances could east this year. However, other major uncertainties are always looming in any examination of the oil markets. Three uncertainties currently under debate are;

  • Libya remaining offline longer than anticipated.
  • Additional unforeseen production outages emerging.
  • Iranian exports changing.

Looking more closely at the US, changes are expected further downstream. Refiners and midstream companies have spend the past 3 years investing in technology to adjust to the new volumes of light sweet crude. This is expected to continue in to this year as the glut of crude oil that once mostly affected the mid continent has now reached the Gulf Coast. Growing volumes of crude oil in the Gulf Coast will also keep regional crude prices down.

Adapted from a press release by Claira Lloyd.

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