OPEC OIL DOWN
Oil production from the Organization of the Petroleum Exporting Countries (OPEC) totaled 31.26 million barrels per day (b/d) in August, down 140,000 b/d from the July level of 31.4 million b/d as several member countries, including Saudi Arabia, trimmed output, according to a just-released Platts survey of OPEC and oil industry officials and analysts.
"This is the first time OPEC output has fallen since February, but it shouldn't be over-interpreted," Margaret McQuaile, senior correspondent for Platts, a leading global provider of energy and commodities information. "The August total still puts OPEC exceeding its official ceiling by 1.26 million b/d and Saudi oil is still flowing at record levels."
The August estimate marked the first monthly fall in OPEC output since February, although the total remained more than 1 million b/d above the group's official 30 million b/d ceiling.
Despite having rolled over the ceiling -- in place since the beginning of 2012 -- in June for a further six months, OPEC has no mechanism for enforcing it as there are no individual country quotas. Furthermore, with Iran preparing to increase supply once international sanctions are removed, the battle for market share that initially appeared to be focused on non-OPEC producers is now also raging within OPEC itself.
Saudi Arabia, having pumped at record levels above 10 million b/d since March, scaled back supply by 50,000 b/d to 10.4 million b/d in August. The kingpin producer, which drove OPEC's November 2014 decision not to reduce output despite sliding oil prices, has given no indication that it is ready to abandon its market share strategy.
Smaller decreases came from Iraq, Libya, Angola and Qatar.
Libyan production remains at less than one quarter of its 1.6 million b/d capacity, with output slipping to just 360,000 b/d in August from 390,000 b/d in July because of ongoing technical problems at fields in eastern Libya and continued blockades of other key oil infrastructure across the country.
In Iraq, exports last month were slightly down on both July and June because of a slight fall in southern exports and the ongoing restrictions on supplies via Turkey because of Kurdistan's move to restart its own independent exports at the expense of the federal barrels it had been exporting on Baghdad's behalf.
Concerns about the Chinese economy have helped drive crude prices downward in recent weeks. North Sea Brent hit a six-year low of $42.23/barrel last week, but has since clawed its way back to around $50/b.
Earlier this week, Iranian Oil Minister Bijan Zanganeh said OPEC's current policy had proved unsuccessful in marginalizing shale oil, a key driver in climbing non-OPEC production, and that member countries should now be willing to reduce supply in order to boost prices. Iran, he said, saw $70-$80/b as a favorable price range for crude and would pursue this target within OPEC.
There is, as yet, no date for the lifting of sanctions, which will be tied to verification of Iranian compliance with the nuclear agreement. The International Atomic Energy Agency is scheduled to deliver its final report in mid-December.
OPEC ministers are next scheduled to meet in Vienna on December 4.
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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.