OPEC oil cut adherence rises

Oil output in Venezuela is dropping amid an economic crisis. (Reuters)
Updated 05 January 2018
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OPEC oil cut adherence rises

LONDON: OPEC deepened compliance with an oil supply-cutting deal in December due to a further decline in Venezuelan output and extra cuts by Gulf exporters, a Reuters survey found, showing strong commitment to the deal despite higher prices.
Adherence to the curbs rose to 128 percent from 125 percent in November, the survey found. The UAE for the first time since the deal took effect in January 2017 pumped below its OPEC target, joining Saudi Arabia and Kuwait.
OPEC is reducing output by about 1.2 million barrels per day (bpd) as part of a deal with Russia and other non-OPEC producers. The pact will run until the end of 2018.
Oil hit its highest since May 2015 this week, supported by falling inventories, strong demand and high OPEC compliance. Many producers, still suffering from a 2014 price collapse, are enjoying the rally and the extra revenues.
“We are all pleased about it,” one official in an OPEC country said of the early 2018 price rise.
The survey shows no sign of producers boosting output to cash in on higher prices or to replace the decline in Venezuela, where output is dropping amid an economic crisis.
In the past, waning compliance as oil prices rallied has reduced the effectiveness of OPEC accords.
Top exporter Saudi Arabia trimmed output by 60,000 bpd, according to sources in the survey who cited stable to lower exports and lower refinery processing, putting supply further below the Kingdom’s OPEC target.
Production in Venezuela, where the oil industry is starved of funds due to a cash crunch, has fallen further below its OPEC target, the survey found. Both exports and refinery operations were lower in December.
The UAE, the incoming OPEC president, has cut production further and delivered its highest adherence yet, according to Reuters surveys. The UAE was a laggard on compliance for most of 2017, compared to peers like Saudi Arabia.
“The UAE has the OPEC presidency this year and they feel they should try to do better,” said an industry source, who has discussed the issue with OPEC officials.
Libyan output slipped by 30,000 bpd, hampered by damage to a pipeline in a suspected attack and other outages.
Among countries with higher output, the biggest rise came from Nigeria, whose exports in December were set to reach a 21-month high, although actual shipments fell short of that level.
The second-largest came from Iraq. A boost in exports from Iraq’s south, the outlet for most of its crude, to a record 3.55 million bpd in December, offset relatively low shipments from the north, the survey found.
Output in northern Iraq is still down after falling in mid-October when Iraqi forces retook control of oilfields from Kurdish fighters who had been there since 2014. This has had the side-effect of boosting Iraqi compliance.
Algerian output rose after a reduced impact from planned oilfield maintenance.
OPEC in late 2016 announced a production target of 32.50 million bpd. The target includes Indonesia, which has since left OPEC, and does not include Equatorial Guinea, the latest country to join.
According to the survey, output in December has averaged 32.28 million bpd, about 530,000 bpd above the target adjusted to remove Indonesia and not including Equatorial Guinea.
With Equatorial Guinea, production in December totalled 32.41 million bpd, up 20,000 bpd from November. The November total was revised down by 90,000 bpd to the lowest since April 2017, according to Reuters surveys.
The Reuters survey is based on shipping data provided by external sources, Thomson Reuters flows data, and information provided by sources at oil companies, OPEC and consulting firms.


China sorghum imports jump after Beijing dropped probe into US shipments: Customs

Updated 23 July 2018
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China sorghum imports jump after Beijing dropped probe into US shipments: Customs

  • China brought in 450,000 tons of sorghum in June, up from last year’s 324,301 tons
  • Corn buyers, meanwhile, scooped up cargoes on worries over the return of US-China trade policy tit-for-tat amid high domestic prices

BEIJING: China’s sorghum imports in June surged 38.1 percent on year, boosted by a temporary easing of Sino-US trade tensions, while corn imports for the month rose to one of highest levels in the past decade, customs data showed on Monday.
China brought in 450,000 tons of sorghum in June, up from last year’s 324,301 tons. Volumes were still down slightly from 470,000 tons in May, data from the General Administration of Customs showed.
Beijing announced in mid-April that importers of sorghum from the United States would have to put up a 178.6 percent deposit on the value of shipments. Several cargoes already on the way changed course and were diverted to other markets.
A month later in a goodwill measure, however, China dropped the deposit and an anti-dumping probe into US sorghum imports as the two sides appeared to be reaching consensus on resolving trade issues.
“Some cargoes were already on the way to China when Beijing dropped the deposit. Then they cleared customs in weeks after. That should have pushed up the June volumes,” said Cherry Zhang, an analyst with Shanghai JC Intelligent Co. Ltd, before the data release.
Corn buyers, meanwhile, scooped up cargoes on worries over the return of US-China trade policy tit-for-tat amid high domestic prices.
Corn imports in June hit 520,000 tons, up 34.6 percent from a year ago and the second highest since July last year. The figures were down from 760,000 tons in May, the data showed.
The corn imports in the first six months tripled to 2.21 million tons, already close to China’s total 2017 purchase of 2.82 million tons of the grain, according to the data.
“There were margins importing corn as domestic corn prices were relatively high. And buyers were buying more corn in recent couple of months to prepare for the Sino-US trade tension in advance,” said Meng Jinhui, an analyst with Shengda Futures.
UScorn and sorghum shipments to China should drop significantly in July and August, analysts and traders said, as Beijing imposed a 25 percent tariff on US grains on July 6.
China buys almost all its sorghum imports from the United States.
In the first half of this year, China has brought in 3.25 million tons of sorghum, up 8.7 percent from the same period of 2017, the data showed.
China also brought in 590,000 tons of barley in June, down 5.6 percent from a year ago. Barley imports for the first half of the year were at 4.4 million tons, down 2.7 percent.
Wheat imports were at 310,000 tons in June, down 33.6 percent from a year ago. Wheat imports for the first half were at 1.95 million tons, down 26.4 percent, the data showed.
China bought 280,000 tons of sugar and 98,566 tons of pork in June. In the first half of the year, China’s sugar imports were at 1.38 million tons, and shipments of pork were at 647,985 tons, both down from last year’s levels.