Considering some oil numbers before the inevitable in Syria

As the likelihood of an attack by Western powers on Syria continues to roil the oil markets, here are a few numbers that we offer as background:

Syrian production: It’s about 50,000 b/d. A few years ago, it was about 350,000 b/d.

Days’ cover: This figure is just for OECD nations, which consist of 34 key countries with market economics. Days’ cover is a statistic published by the International Energy Agency — an arm of the OECD — noting how many days of inventories would cover consumption if supply dropped to zero. In the second quarter of this year, days’ cover held by industry stood at 59 days, which is at the high end of recent estimates.

Goldman Sachs estimate: But a report by Goldman Sachs last week indicated that those second quarter inventory figures are very much a thing of the past. The report notes problems in Libya and Iraq — more on that later — and says that these OPEC outages, since the start of summer “have taken 33 million barrels off the market, which was further exacerbated by a 32 million barrel downward revision to total OECD petroleum inventories by the IEA.” And ominously, the report notes: “This completely erases the surplus cushion developed in 2008/2009, bringing OCED inventories back to 2008 levels at the same time as Saudi Arabia is producing near 10 million b/d, geopolitical risk remains high and oil demand is running above expectations.” It reduced its end-October forecast of global inventories by a “significant” 94 million barrels.

Libyan production: The news out of Libya changes every day, but it’s usually not good. The only question is which supply source is going to get hit with some sort of disruption. In the latest news, traders told Platts today that the El Sharara field in western Libya is shut because a pipeline that brings crude from the field to the export terminal of Zawiya had been attacked by militants. With this kind of confusion, it’s tough to get a hard estimate on Libyan output. For example, Libyan oil minister Adbel Bari el-Arousi told Libyan TV Tuesday that production was running at around 665,000 b/d. There are other estimates that output is down to 200,000 b/d. Platts’ estimate of July production was 1 million b/d.

platts