Opec forecasts higher production from non-members next year
Opec said its members produced slightly less last month, although it sees rising output from non-member producing countries this year and next.
In its latest monthly outlook on the oil market, Opec said yesterday that output from its 14 members fell by a marginal 23,000 barrels per day (bpd) making it effectively unchanged from the previous month at 33.2 million bpd.
The Vienna-based secretariat also raised its forecast for output from non-members, by 180,000 bpd for this year and by 350,000 bpd for next year, citing the resilience of output from onshore US sources (mainly shale oil) and the start-up of the Kashagan field in Kazakhstan, which is expected to start producing next month or November.
Opec’s monthly report is most closely watched for information on its members’ output.
Saudi Arabia reported that output last month was down only slightly from the previous month’s record output level, at 10.63 million bpd versus 10.67 million bpd in July. Likewise, the UAE continued to produce well above 3 million bpd at 3.154 million bpd (down about 30,000 bpd), and Kuwait was at a steady rate of nearly 3 million bpd.
Among other key members, Iran produced at 3.63 million bpd, roughly the same level as the previous three months and apparently hitting a plateau after boosting output 500,000 bpd from January when nuclear-related sanctions were lifted.
Similarly, Iraq’s monthly output also was hardly changed at 4.6 million bpd, having been at about 4.5 million to 4.6 million bpd since last year.
Opec has been engaged in a frenetic diplomatic effort in recent weeks to try to reach agreement ahead of an informal meeting of its members in Algiers in two weeks to reach a deal to curb output.
Algeria’s oil minister, Noureddine Bouterfa, met Opec’s secretary-general, Mohammad Barkindo, and the Saudi oil minister, Khaled Al Falih, last week in Paris, and the Russian oil minister, Alexander Novak, in Moscow, to try to drum up support for some kind of output-capping deal. Mr Barkindo had earlier met with the Iranian oil minister in Tehran. All expressed support for measures to help stabilise oil markets but there has been no commitment by any major producer to cap its own production.
Meanwhile, US oil production is expected to fall at a slower rate, exacerbating the oil glut.
The US government’s Energy Information Agency (EIA) last week revised upward its short-term outlook for domestic production by 200,000 bpd for this year to 8.8 million bpd, though that is still 600,000 bpd below last year’s average output.
Output next year is expected to be 8.5 million bpd. The upward revision, the EIA said, is due to expected “higher drilling activity, rig efficiency, and well-level productivity.”
The latest rig count in the US from oil services company Baker Hughes lent support to the view of a resilient US sector, showing last week that though it is still only at about 60 per cent of last year’s levels, rigs in use have been rising in recent weeks, with a sharp jump in offshore rigs in the latest week.
Oil prices have actually been fairly stable since spring, within a range of about US$40 to $50 a barrel, with signs of inventories starting to shrink worldwide. In trading late yesterday, Brent crude was up 0.9 per cent at $48.46 a barrel.
Opec’s data show, however, that though OECD crude oil inventories have been falling in recent months they still remain stubbornly high compared to last year’s level and the five-year average.
Oil prices remain subject to sharp swings even within their narrower range. After the run-up in August, “the market succumbed to fresh selling in the belief that Opec and non-Opec producers are not yet prepared or able to reach an agreement,” said Ole Hansen, head of commodities research at Denmark’s Saxo Bank.
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Published: September 12, 2016 04:00 AM