OPEC OIL PRODUCTION UP: 32.12 MBD
AOG - The rise in crude production, despite the Organization of Petroleum Exporting Countries joining hands with a Russia-led group of 11 non-OPEC oil producers, to extend the production cut deal till March next year, is being attributed to a sharp recover of output in Libya and Nigeria – the two OPEC members that were exempted from complying with the pact, according to Platts.
Despite the high compliance from the cartel's biggest producer and de facto leader Saudi Arabia, as well as from Angola, output jumped from the two excepted OPEC members, and Iraq continued to under-comply significantly, increasing its production in May, the Platts survey showed.
According to the survey, Nigerian output increased last month to 1.73mn bpd, up by 80,000 bpd from April, and the highest level since March 2016, due to the restart of Forcados crude exports. According to Platts shipping data, two Suezmax tankers fully laden with crude oil set sail from Nigeria's Forcados terminal at the end of May.
In Libya, crude output increased by 180,000 bpd to 730,000 bpd in May – the highest level since October 2014 – with the giant Sharara field resuming production, and exports from both key eastern and western ports rising steadily.
Expectations are that output from Libya and Nigeria will continue to rise in the summer, which will be, for OPEC, a 'tricky period in its attempt to accelerate the market's rebalancing', Platts said.
While production at OPEC's no1 producer Saudi Arabia dropped to 9.93mn bpd in May, down 40,000 bpd from April, output at the cartels no 2 producer – Iraq – increased, by 70,000 bpd to 4.43mn bpd in May, the Platts survey found.
Iraq continues to apparently disregard the output cut deal, and its compliance in the first five months of the deal is 70%, one of the least-compliant producers, according to calculations by Platts.
OPEC's no.3 producer Iran – which was allowed to slightly raise and cap output at 3.797mn bpd in the deal – was just below that level, at 3.78mn bpd in May.
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REUTERS - Brent crude futures LCOc1 were down 72 cents at $61.49 per barrel at 1020 GMT, having fallen by 1.5 percent on Tuesday, its largest one-day drop in a month. U.S. West Texas Intermediate (WTI) crude CLc1 was at $55.12 per barrel, down 58 cents.
BLOOMBERG - Prices dropped during the session as the International Energy Agency said the recent recovery in oil prices, coupled with milder-than-normal winter weather, is slowing demand growth. The worsening outlook for consumption dampened some of the enthusiasm that OPEC and its allies will extend supply curbs.
Global energy needs rise more slowly than in the past but still expand by 30% between today and 2040. This is the equivalent of adding another China and India to today’s global demand.
Product exports have grown significantly over the past several years and are expected to continue to grow as Russian refineries add capacity to produce more high-quality products.