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2019-01-04 11:50:00

OPEC PRODUCTION DOWN 530 TBD

OPEC PRODUCTION DOWN 530 TBD

AB - Before its agreement to cut oil supplies even started, OPEC's production plunged by the most in almost two years last month.

In a sign of the urgency felt by the cartel amid tumbling crude prices, leading member Saudi Arabia throttled back production, according to a Bloomberg survey of officials, analysts and ship-tracking data. The group's pact to curb output only formally started this week.

The kingdom's deliberate cutbacks were compounded by unplanned losses in Iran, which is being targeted by US sanctions, and in Libya, where protests halted the biggest oil field.

As a result, oil output from the Organization of Petroleum Exporting Countries fell 530,000 barrels a day to 32.6 million a day last month. It's the sharpest pullback since January 2017, when the group first embarked on its strategy to clear the glut created by rising supplies of US shale oil.

A global coalition of oil producers known as OPEC+, which comprises both members of the group and other exporters including Russia, agreed on December 7 to reduce output during the first six months of 2019. Crude prices failed to rally however, and instead slumped to the lowest in more than a year.

Brent crude futures climbed as much as 5.1 percent on Wednesday as shipping data showed Saudi Arabia was delivering its announced cutbacks. It traded at $55.74 a barrel at 5:52pm in London. That's about 35 percent below the four-year peak reached in early October.

Investors remain concerned that OPEC+ isn't cutting enough to make way for another surge of supply anticipated from shale oil drillers in America. They're also increasingly worried that a slowing global economy, coupled with the US-China trade dispute, will hit fuel demand and swell the pile-up of unwanted crude.

"Slowdown fears" are "putting more pressure on OPEC to stabilize the petroleum markets," said Phil Flynn, a markets analyst at Price Futures Group Inc. "So let the cuts begin."

The Saudis curtailed production by 420,000 barrels a day to 10.65 million last month, from a record of just above 11 million reached in November, the survey showed. Energy Minister Khalid Al-Falih has promised to cut even deeper this month, going beyond the reductions the kingdom signed up to.

Unintentional Cutbacks

As is often the case with OPEC, not all of the supply restraint seen last month was deliberate.

Libya's production fell by 110,000 barrels a day to 1 million a day. Sharara, the country's biggest oil field, has been offline since it was stormed in mid-December by an armed group and demonstrators demanding better government services.

The situation in the North African nation, plagued by clashes and unrest since the fall of former leader Moammar Qaddafi in 2011, worsened on Wednesday when bad weather at the Es Sider port forced a separate output reduction of 100,000 barrels a day.

Iran's crude production fell by 120,000 barrels a day last month to 2.92 million a day, the survey showed. The country's output has slumped 23 percent since US President Donald Trump announced in May he would re-impose sanctions after abandoning a nuclear accord with the Islamic Republic.

The penalties resumed in November, though the US surprised importers by awarding many of them temporary waivers, which could cause shipments to rebound this month.

Even with the pre-emptive Saudi cutbacks, OPEC has plenty of work still to do to fulfill its promises. The 11 members bound by the deal committed to an overall cut of 800,000 barrels a day, mostly from their October levels, while their non-OPEC partners pledged a decrease of 400,000 barrels a day.

Production from those 11 countries is now 140,000 barrels a day below their October level, so they would need to cut about another 660,000 barrels a day to implement the agreement.

Countries which last month rushed to maximize oil exports before the agreement took effect will now need to reverse those increases.

Iraq, which bridled at the requirement to cut shipments last year, bolstered output by 130,000 barrels a day in December to 4.7 million a day, according to the survey. The United Arab Emirates, which has been expanding production capacity, also increased output.

 

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Earlier: 

 W.Asia
2018, December, 26, 07:40:00

ОПЕК + РОССИЯ: МИНУС 2.5%

МИНЭНЕРГО РОССИИ - Принято консолидированное решение о совместных действиях с коллегами из ОПЕК и не ОПЕК по сокращению добычи на 2,5% для стран ОПЕК и 2% для стран не ОПЕК.

 

 W.Asia
2018, December, 26, 07:25:00

OPEC: 26 MBBL SURPLUS

AN - “Based on available figures, we have around 26 million barrels of surplus ... compared to 340 million barrels in early 2017,” Al-Mazrouei told a press conference in Kuwait City.

 

 W.Asia
2018, December, 14, 09:20:00

RUSSIA - SAUDI ARABIA COOPERATION

IEA - Cooperation between Russia and Saudi Arabia is now the basis of production management with these two countries having a large capacity to swing output one way or the other. For them, prices falling further would place their budgets under great stress.

 АЛЕКСАНДР НОВАК В ИНТЕРВЬЮ CNN: “НАШИ РЕШЕНИЯ ОСНОВАНЫ НА ФУНДАМЕНТАЛЬНЫХ ФАКТОРАХ РЫНКА”
2018, December, 12, 09:05:00

АЛЕКСАНДР НОВАК В ИНТЕРВЬЮ CNN: “НАШИ РЕШЕНИЯ ОСНОВАНЫ НА ФУНДАМЕНТАЛЬНЫХ ФАКТОРАХ РЫНКА”

МИНЭНЕРГО РОССИИ - Как отметил Александр Новак, принятое решение о снижении суммарной добычи на 1,2 млн барр./сутки отражает ожидания рынка накануне встречи стран ОПЕК и не ОПЕК. As noted by Alexander Novak, the decision to reduce the total production by 1.2 million barrels per day reflects the market expectations on the eve of the meeting of OPEC and non-OPEC countries.

 W.Asia
2018, December, 10, 08:55:00

OIL PRODUCTION DOWN 1.2 MBD

OPEC - Accordingly, the 5th OPEC and non-OPEC Ministerial Meeting, following deliberations on the immediate oil market prospects and in view of a growing imbalance between global oil supply and demand in 2019, hereby decided to adjust the overall production by 1.2 mb/d, effective as of January 2019 for an initial period of six months. The contributions from OPEC and the voluntary contributions from non-OPEC participating countries of the ‘Declaration of Cooperation’ will correspond to 0.8 mb/d (2.5%), and 0.4 mb/d (2.0%), respectively.

 W.Asia
2018, December, 7, 08:30:00

RUSSIA - SAUDIS PACT

WSJ - Russia and Saudi Arabia have agreed to extend OPEC’s efforts to stabilize oil markets, Russian President Vladimir Putin said over the weekend, as the broader coalition of producers inches closer to a deal this week.

 

 W.Asia
2018, October, 24, 11:35:00

NO OIL EMBARGO

TASS - Saudi Arabia is a very responsible country, for decades we used our oil policy as responsible economic tool and isolated it from politics. So lets hope that the world would deal with the political crisis, including the one with Saudi citizen in Turkey, with wisdom. And we will exercise our wisdom both in political and economic fronts.

 

Tags: OPEC, OIL, PRODUCTION