Opec countries boosted oil output to a 14-month high in October as crude futures sank into a bear market, a Bloomberg survey showed yesterday.
Production by the 12-member Opec climbed by 53,000 barrels a day to 30.974 million, led by gains in Iraq, Saudi Arabia and Libya, according to the survey of oil companies, producers and analysts. Last month’s total was revised 14,000 barrels a day lower to 30.921m because of changes to the Iraqi, Kuwaiti, Nigerian and Qatari estimates.
Opec nations lifted output as Brent crude dropped to a four-year low amid ample global supplies and sluggish demand. The group’s biggest producers, Saudi Arabia, Iraq, Iran and Kuwait, have cut their official selling prices, sparking speculation they will compete for market share rather than trim output. Ministers will gather next month to discuss the group’s production target.
“The data confirms that there’s a battle over market share,” John Kilduff, a partner at Again Capital, a New York-based hedge fund that focuses on energy, said. “The members are playing chicken with the market.”
Brent crude for December settlement slipped 88 cents, or 1 per cent, to US$86.24 a barrel on the London-based ICE Futures Europe exchange on Friday. Brent, the benchmark for more than half the world’s oil, touched $82.60 on October 16, the lowest since November 2010 and down more than 20 per cent from its June high, meeting the common definition of a bear market.
Opec is also seeing demand for its crude drop as US crude production surges. US output rose 0.4 per cent to 8.97m barrels a day last week, the highest in weekly Energy Information Administration estimates that began in January 1983. The agency's monthly data, which goes back to 1920 and is based on data collected by state and federal agencies, shows production at the highest since 1986.
“The members of Opec are in a tough position,” Mike Wittner, head of oil market research at Societe Generale in New York, said by phone. “The lack of action so far shows that the Saudis are serious about other members doing their part.”
Iraqi output climbed 150,000 barrels a day to 3.3m this month, according to the survey. It was the biggest gain in October and left the country pumping the most oil since May.
Saudi Arabia, the group’s biggest producer, bolstered output by 100,000 barrels a day to 9.75m this month to meet demand from two new refineries, Yasref and Satorp.
“The Saudis seem to be more concerned about their volumes than about falling prices,” Mr Kilduff said.
Libyan output climbed by 70,000 barrels a day to 850,000 this month, the sixth straight increase. It was the highest level since June 2013. The country’s current output is about half what it was before the 2011 rebellion that ended Muammar Qaddafi’s 42-year rule.
Follow The National's Business section on Twitter
