OPEC OIL DOWN
The Organization of the Petroleum Exporting Countries said its collective production fell sharply in October, closing the gap between what the cartel sets as its official target and what it actually pumps.
Despite the drop, oil prices continued to slide early Wednesday—suggesting market participants weren't interpreting the output fall as a policy shift inside the group. OPEC has struggled to reach agreement among members over how to respond to weakening prices.
Putting fresh pressure on prices, Libyan officials also confirmed Wednesday that the country's largest field, knocked out of commission last week by a militant attack, was back online.
OPEC said in its monthly oil-markets report Wednesday that its collective crude production declined by 226,400 barrels a day, to 30.25 million barrels a day, in October. The drop was largely driven by lower Saudi crude output, which OPEC said fell by about 69,900 barrels a day, to 9.6 million barrels a day.
The group bases its estimates on secondary sources, such as shipping trackers and energy consultancies. It also releases numbers that individual members report to the group, but the two sets of numbers often don't match up. For instance, OPEC said Wednesday that Saudi Arabia officially reported that its output fell by just 13,700 barrels a day, and stood at 9.69 million barrels a day in October.
Two people familiar with Saudi output separately told The Wall Street Journal earlier Wednesday that Saudi crude output fell by between 100,000 and 150,000 barrels a day in October, and that the kingdom produced an average of around 9.55 million to 9.6 million barrels a day.
Such monthly fluctuations can be a result of a wide range of things, from routine maintenance to policy shifts, and Saudi supply tends to decline in the autumn as temperatures fall and domestic demand—particularly to power air conditioning—falls. But Saudi Arabia's output is being closely scrutinized by oil-market watchers for any sign of whether the kingdom is throttling back amid weak oil prices.
OPEC has agreed to target collective output at about 30 million barrels a day. The group is expected to discuss that target at a Nov. 27 meeting. OPEC could cut its target, or it could officially endorse a move to collectively rein in production to bring it closer to that target.
October's falling output makes any move to comply better with the target easier. OPEC has pegged global demand for its crude at 30.15 million barrels a day this quarter, but has said it expects that to fall to 29.2 million barrels a day on average next year.
Amid the recent fall in oil prices, OPEC members have failed to respond in a coordinated way. They've cut prices and, at times, boosted output, in an effort to protect or increase market share—sometimes at the expense of fellow OPEC members.
The president of OPEC member Ecuador has said it and Venezuela want the group to cut production. Libya has also said it would support at least an agreement to rein in actual production to the current target. Kuwait, meanwhile, has publicly ruled out any reduction.
Saudi Arabia Oil Minister Ali al-Naimi said Wednesday that talk of an oil price war among producers "is a sign of misunderstanding—deliberate or otherwise" and that the kingdom's goal is stable markets and steady prices. Speaking at a natural-gas conference during a trip to Mexico, Mr. Naimi declined to comment when asked by reporters about possible production cuts, or the possibility that OPEC would reduce its output ceiling at the cartel's next meeting later this month, in order to boost sagging prices.
"Saudi Arabia does not set the oil price," Mr. Naimi said in prepared comments. "The market sets the price. We do our best, with other producers, to ensure price stability." He said that OPEC and non-OPEC nations need to work together to stabilize prices.
Separately Wednesday, Fatih Birol, the chief economist of the International Energy Agency, an energy watchdog for consuming countries, said Wednesday that currently weak oil prices could prove short-lived, if it triggers a curtailment in oil-field investment in the U.S.
"If prices remain at these levels we expect a decline in upstream expenditure in 2015 by 10% in the U.S.," he told reporters in London. "And this means production growth in the U.S. may well slow down." If prices continue to fall from their current level, investment could be cut even further, Mr. Birol said.
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AN - China National Offshore Oil Corp. (CNOOC) is willing to invest $3 billion in its existing oil and gas operation in Nigeria, the Nigerian National Petroleum Corporation (NNPC) said on Sunday following a meeting with the Chinese in Abuja.
REUTERS - Production at Libya’s giant Sharara oil field was expected to fall by at least 160,000 barrels per day (bpd) on Saturday after two staff were abducted in an attack by an unknown group, the National Oil Corporation (NOC) said.
IMF - Output grew by 3.8 percent in 2017, underpinned by a resilient non-hydrocarbon sector, with robust implementation of GCC-funded projects as well as strong activity in the financial, hospitality, and education sectors. The banking system remains stable with large capital buffers. Growth is projected to decelerate over the medium term.
IMF - Higher oil prices and short-term portfolio inflows have provided relief from external and fiscal pressures but the recovery remains challenging. Inflation declined to its lowest level in more than two years. Real GDP expanded by 2 percent in the first quarter of 2018 compared to the first quarter of last year. However, activity in the non-oil non-agricultural sector remains weak as lower purchasing power weighs on consumer demand and as credit risk continues to limit bank lending.