Opec production rises for third consecutive month
The monthly oil data from the producers’ group comes as Opec countries met in Abu Dhabi this week to discuss slipping compliance with a deal to curb output.
Doubts have emerged about the effectiveness of the Opec-led agreement, which includes other countries such as Russia, as rising US production and increasing output from exempt countries such as Libya and Nigeria has offset drastic cutbacks.
Total Opec production stood at close to 32.9m b/d in July, up 173,000 b/d from the prior month. The figure is 500,000 barrels more than what the group estimates will be demand for its crude this year.
Since the start of the year when the supply cut deal came into effect, Saudi Arabia – the cartel’s defacto leader – has produced well below its production allocation of just over 10m barrels a day.
But data from secondary sources such as consultants and analysts submitted to Opec, and which is being used to gauge compliance with the agreement, shows the kingdom has for the first time slightly surpassed its target using this measure.
Iraq, Algeria, Ecuador, Qatar, the UAE and Gabon also produced more than their agreed output levels.
In an unusual move, Saudi Arabia’s government did not submit any July data to Opec in so-called “direct communication” even though the kingdom has pushed for greater transparency in output.
The figures come as Saudi Arabia’s energy minister Khalid Al Falih has been vocal in his frustration with certain producers that have not fulfilled their pledged level of cuts.
After rising to almost $58 a barrel earlier this year, when oil market participants bet on rapidly falling global inventories, prices took a hit when these draws did not materialise as quickly as expected.
Despite Brent crude staging a recovery in July and August, trading at $53.38 on Thursday, some analysts are not convinced the rally will persist.
Bearish sentiment has overshadowed data that shows significant drawdowns in US stockpiles, robust oil demand forecasts around the world, and that US crude production is expected to come in slightly weaker than initially anticipated.
Opec’s monthly market report upwardly revised demand growth for 2017, by 100,000 b/d to almost 1.4 mb/d. Total oil demand is anticipated to average 96.5m b/d this year.
It also revised lower production from non-Opec countries, led by the US, by 28,000 b/d. Total output from outside of the cartel is forecast at 57.8m b/d.