OPEC oil output rises more on Libya restart, says survey

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

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.


WEEKLY ENERGY RECAP: Despite long-term challenges, oil prices remain in healthy range

WEEKLY ENERGY RECAP: Despite long-term challenges, oil prices remain in healthy range
Updated 30 min 17 sec ago

WEEKLY ENERGY RECAP: Despite long-term challenges, oil prices remain in healthy range

WEEKLY ENERGY RECAP: Despite long-term challenges, oil prices remain in healthy range

Oil prices have been stable since early January, with Brent crude price hovering around $55. Brent crude closed the week slightly higher at $55.41 per barrel,
while West Texas Intermediate (WTI) closed slightly lower at $52.27 per barrel.

Oil price movement since early January in a narrow range above $50 is healthy, despite pessimism over an increase in oil demand, while expectations of US President Joe Biden taking steps to revive energy demand growth are
still doubtful. The US Energy Information Administration (EIA) reported a hike in US refining utilization to its highest since March 2020, at 82.5 percent. The EIA reported a surprise weekly surge in US commercial crude stocks by 4.4
million barrels. Oil prices remained steady despite the bearish messages sent from the International Energy Agency (IEA), which believes it will take more time for oil demand to recover fully as renewed lockdowns in several countries weighed on oil demand recovery.

The IEA’s January Oil Market Report came as the most pessimistic monthly report among other market bulletins from the Organization of the Petroleum Exporting Countries (OPEC) and EIA. It forecast oil demand will bounce back to 96.6 million bpd this year, an increase of 5.5 million bpd over 2020 levels.

Though the IEA has lowered its forecast for global oil demand in 2021 due to lockdowns and vaccination challenges, it still expects a sharp rebound in oil consumption in the second half of 2021,
and the continuation of global inventory depletion.

The IEA reported global oil stocks fell by 2.58 million bpd in the fourth quarter of 2020 after preliminary data showed hefty drawdowns toward the end of the year. The IEA reported OECD industry stocks fell for a fourth consecutive month at 166.7
million barrels above the last five-year average. It forecast that global refinery throughput is expected to rebound by 4.5 million bpd in 2021, after a 7.3 million bpd drop in 2020.

The IEA monthly report has led to some short term concern about weakness in the physical crude spot market, and the IEA has acknowledged OPEC’s firm role in stabilizing the market.

Controversially, the IEA believes that a big chunk of shale oil production is profitable at current prices, and hence insinuated that shale oil might threaten OPEC market share.

It also believes that US shale oil producers have quickly responded to oil price gains, winning market share over OPEC producers. However, even if US shale oil drillers added more oil rigs for almost three months in a row, the number of operating rigs is still less than half that of a year ago, at 289 rigs.

The latest figures from the Commodity Futures Trading Commission show that crude futures “long positions” on the New York Mercantile Exchange are at 668,078 contracts, down by 18,414 contracts from the previous week (at 1,000 barrels for each contract).