OPEC oil output rises more on Libya restart, says survey

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Updated 31 October 2020

OPEC oil output rises more on Libya restart, says survey

  • Higher Iraqi exports and hit to global demand put pressure on OPEC+ to delay planned production boost

LONDON: OPEC oil output has risen for a fourth month in October, a Reuters survey found, as a restart of more Libyan installations and higher Iraqi exports offset full adherence by other members to an OPEC-led supply cut deal.

The 13-member Organization of the Petroleum Exporting Countries has pumped 24.59 million barrels per day (bpd) on average in October, the survey found, up 210,000 bpd from September and a further boost from the three-decade low reached in June.
An increase in OPEC supply and a new hit to demand as coronavirus cases rise have weighed on oil prices, which have fallen 8 percent in October to near $37 a barrel. This puts pressure on OPEC and allies, known as OPEC+, to postpone a planned January 2021 supply boost, some analysts say.
“Oil demand is currently not supportive,” said Stephen Brennock of broker PVM. “At the bare minimum, OPEC+ will have to roll over its current production levels until the end of March.” Libya is one of the OPEC members exempted from a deal by OPEC+ to curb supply.
OPEC+ made a record cut of 9.7 million bpd, or 10 percent of global output, from May as the pandemic destroyed demand. Since August, the group has been pumping more as the cut tapered down to 7.7 million bpd, of which OPEC’s share is 4.868 million bpd.
In October, OPEC countries bound by the deal have delivered 101 percent of the pledged reduction, the survey found, steady from September. October’s increase means OPEC is pumping about 2.2 million bpd more than June’s figure, which was the lowest since 1991.
Libyan production is rising after Eastern Libyan commander Khalifa Haftar said his forces would lift their eight-month blockade of oil exports.
The survey found output increased by 250,000 bpd in October, a faster rebound than some analysts and OPEC officials expected.

FASTFACT

OPEC pumped 24.59 million barrels per day on average in October.

The second-largest increase came from Iraq, which lifted exports from its southern terminals. Compliance was still almost 100 percent, higher than Iraq managed in earlier OPEC+ deals. Top exporter Saudi Arabia kept output steady, as did Kuwait, the survey found.
There was little change in supply from Iran, which is also exempt from the OPEC cut, after an increase in September in defiance of US sanctions. Exports have been slightly lower in October, the survey found.
Among the OPEC members lowering output, the biggest reduction came from the UAE, which had pumped above its quota in August. Industry sources said the reduction suggests the UAE is still compensating for its August increase.
Venezuela, the third OPEC member exempt from the supply cut, also posted a decline.
The Reuters survey aims to track supply to the market and is based on shipping data provided by external sources, Refinitiv Eikon flows data, information from tanker-trackers such as Petro-Logistics and Kpler,
and information provided by sources at oil companies, OPEC and consultants.


Japan’s capital sees prices fall most in over 8 years as COVID-19 pain persists

Updated 27 November 2020

Japan’s capital sees prices fall most in over 8 years as COVID-19 pain persists

  • Tokyo core CPI marks biggest annual drop since May 2012
  • Data suggests nationwide consumer prices to stay weak

TOKYO: Core consumer prices in Tokyo suffered their biggest annual drop in more than eight years, data showed on Friday, an indication the hit to consumption from the coronavirus crisis continued to heap deflationary pressure on the economy.
The data, which is considered a leading indicator of nationwide price trends, reinforces market expectations that inflation will remain distant from the Bank of Japan’s 2% target for the foreseeable future.
“Consumer prices will continue to hover on a weak note as any economic recovery will be moderate,” said Dai-ichi Life Research Institute, which expects nationwide core consumer prices to fall 0.5% in the fiscal year ending March 2021.
The core consumer price index (CPI) for Japan’s capital, which includes oil products but excludes fresh food prices, fell 0.7% in November from a year earlier, government data showed, matching a median market forecast.
It followed a 0.5% drop in October and marked the biggest annual drop since May 2012, underscoring the challenge policymakers face in battling headwinds to growth from COVID-19.
The slump in fuel costs and the impact of a government campaign offering discounts to domestic travel weighed on Tokyo consumer prices, the data showed.
Japan’s economy expanded in July-September from a record post-war slump in the second quarter, when lockdown measures to prevent the spread of the virus cooled consumption and paralyzed business activity.
Analysts, however, expect any recovery to be modest with a resurgence in global and domestic infections clouding the outlook, keeping pressure on policymakers to maintain or even ramp up stimulus.