IEA said, oil production from the Middle East has climbed to a record while U.S. output slumps, in a sign that OPEC's strategy of defending market share is succeeding.
Middle Eastern output exceeded 31 million barrels a day for a third month in June amid near-record supply from Saudi Arabia, while U.S. oil production slid 140,000 barrels a day to 12.45 million. While the re-balancing of global oil markets is progressing, record-high inventories remain a threat to the recent stability of oil prices.
When U.S. shale production was moving upwards very fast it became fashionable to talk of lower reliance on traditional suppliers, the Middle East's resurgence is an eloquent reminder that even when U.S. shale production does resume its growth, older producers will remain essential for oil markets.
Oil has recovered more than 70 percent from the 12-year low reached in January as Saudi Arabia's strategy to pressure OPEC's rivals succeeds in reversing the U.S. shale oil boom. Elevated output from the Middle East pushed the region's share of world supplies to 35 percent, the highest since the late 1970s.
Production from the Organization of Petroleum Exporting Countries climbed to an eight-year high last month, boosted by the re-admission of Gabon, which swelled the number of members to 14. The group's crude output rose 400,000 barrels a day to 33.21 million a day as Saudi Arabia boosted production to meet peak domestic demand during the summer and as Iran continued its export recovery following the end of international sanctions in January.
Not all of OPEC's members have reaped the benefits of the Saudi-led market strategy. Venezuela's crude production sank to a 13-year low of 2.18 million barrels a day last month as an economic crisis triggered by the oil-price rout weighed on the country's petroleum industry.
In the U.S., crude production retreated by 220,000 barrels to 8.9 million a day in April, the most recent month for which comprehensive data is available. That was the biggest drop since 2008 as the two-year price slump depressed investment and drilling activity. Output from all countries outside OPEC will tumble by 900,000 barrels a day this year, the largest decline since 1992, before recovering by 200,000 barrels a day in 2017, the agency predicted.
The agency made few changes to its forecasts, raising estimates for global oil demand this year and next by 100,000 barrels a day amid resilient fuel consumption in Europe. The world growth rate for 2017 remains unchanged, with demand seen rising 1.3 percent to 97.4 million barrels a day.
While supply and demand were mostly in balance in the second quarter, bloated stockpiles remain a dampener on oil prices. Oil inventories in industrialized nations climbed to an all-time high of more than 3 billion barrels in May, while the volume of crude being hoarded on tankers at sea has reached the highest level since 2009.
The modest fall back in oil prices in recent days to closer to $45 a barrel is a reminder that the road ahead is far from smooth.
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BLOOMBERG - Treasury Secretary Steven Mnuchin told a Texas judge that Exxon Mobil Corp. doesn’t have a right to see privileged documents related to a $2 million fine assessed against the energy company for violating sanctions related to Russia’s 2014 invasion of Ukraine.
NPD - Preliminary production figures for June 2018 show an average daily production of 1 747 000 barrels of oil, NGL and condensate, which is an increase of 88 000 barrels per day compared to May.
NOVATEK - In the first half 2018, NOVATEK’s hydrocarbons production totaled 264.3 million barrels of oil equivalent (boe), including 32.93 billion cubic meters (bcm) of natural gas and 5,864 thousand tons of liquids (gas condensate and crude oil), resulting in an increase in total hydrocarbons production by 6.3 million boe, or by 2.4%, as compared to the first half 2017.
REUTERS - Brent crude futures LCOc1 were down 75 cents, or 1 percent, at $78.11 a barrel by 0308 GMT, having fallen as low as $77.60. U.S. crude CLc1 was down 55 cents, or 0.7 percent, at $73.56.