OPEC OIL PRODUCTION: 32.19 MBD
PLATTS - Months of confidence that global demand growth in 2018 will amply absorb any increases in non-OPEC supply appear to have finally eroded, with OPEC's analysis arm on Wednesday issuing its first mildly bearish outlook for the year.
In its closely watched monthly oil market report, OPEC projected a year-on-year rise of 1.66 million b/d in non-OPEC supplies in 2018, while demand is seen increasing by 1.60 million b/d.
This is the first report since OPEC began forecasting 2018 figures in July 2017 that its estimate of non-OPEC supply growth has exceeded its prediction of global demand, and it indicates that the bloc will have to maintain its production discipline if it wants the market's rebalancing to continue, though continued declines in Venezuelan output provide some cushion for other members.
Non-OPEC supply in 2018 "is now expected to grow at a faster pace," the report stated, and will average 59.53 million b/d, a 280,000 b/d upward revision from last month's forecast, largely due to an increase in forecast US output.
The report noted that oil prices over the past few months have been higher than they have been in more than two years "For 2018, higher growth is expected on the back of the projected increase in US shale production following a better price environment, not only for shale producers, but also for other countries, such as Canada, UK, Brazil and China," the report said.
Global demand will hit 98.63 million b/d in 2018, a 30,000 b/d upward revision from February's report as OPEC continues to see healthy economic growth driving greater consumption, though it warned that rising interest rates and the recent decision by the US to impose steel and aluminum tariffs could dampen that momentum.
Demand for OPEC crude will average 32.61 million b/d in 2018, the organization calculated, a 200,000 b/d decrease from last month's projection.
Assuming OPEC keeps its production at the 32.19 million b/d in February as estimated by secondary sources used to track output independently in the report, the market will tighten significantly in the second half of the year, following stock builds in the first half.
OECD commercial oil inventories rose 13.7 million barrels in January and remain 50 million barrels above the five-year average, OPEC estimated. The stocks represent 60.0 days of forward cover, 0.6 days lower than the five-year average.
VENEZUELA CONTINUES FALL
The report comes as OPEC and 10 non-OPEC partners led by Russia are coordinating on supply cuts of 1.8 million b/d from October 2016 levels to rebalance the market and bring OECD inventories down to the five-year average.
A monitoring committee chaired by Saudi energy minister Khalid al-Falih overseeing the deal will meet in Saudi Arabia in April to review compliance with the cuts and assess market conditions.
OPEC's February output, which was an 80,000 b/d decline from December, was some 540,000 b/d below their nominal ceiling of 32.73 million b/d, when each country's quota under the agreement is added up.
Venezuela, whose production has been in free fall, once again had the largest month-on-month drop in production in February of 50,000 b/d to average 1.55 million b/d, secondary sources estimated.
The crisis-wracked country self-reported to OPEC a February output figure of 1.59 million b/d, down 180,000 b/d from December. Venezuela's quota under the deal is 1.97 million b/d.
The UAE had the second largest fall of 30,000 b/d from January to average 2.83 million b/d in February, secondary sources estimated. This is largely due to field maintenance, industry officials previously told S&P Global Platts. The UAE's quota under the deal is 2.87 million b/d.
Iraq, OPEC's second largest producer, had a fall of just below 30,000 b/d to 4.43 million b/d in February. The country, which has a quota of 4.35 million b/d, self-reported February output of 4.36 million b/d, the sixth month in a row in which it has reported that figure.
Nigeria saw the largest rise in the month, boosting production just over 20,000 b/d to 1.81 million b/d, while Libya increased output by 10,000 b/d to 1 million b/d. The two countries have a combined 2.8 million b/d cap under the deal, after having spent 2017 exempted from the cuts as they recovered from civil unrest.
Saudi Arabia, OPEC's largest member, pumped 9.98 million b/d in February, secondary sources estimated, while it self-reported output of 9.94 million b/d. Its quota is 10.06 million b/d.
Iran, OPEC's third largest producer, which is allowed to pump 3.80 million b/d under the deal, had output of 3.81 million b/d in January, according to secondary sources, matching what it self-reported to OPEC.
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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.