IEA: OPEC Compliance With Oil Cuts At Lowest Levels In Six Months

Posted July 14, 2017

By setting a range for the production ceiling, OPEC was "making provisions for the expected recovery of production" from Libya, Nigeria and Iran, he said.

Libya and Nigeria are expected to send representatives to the next meeting of the OPEC and non-OPEC Joint Technical Committee on July 22 in Russia, Barkindo said. This June, Nigerian production rose to 1.78 million bpd, its highest level since January 2016.

"We (OPEC) are fairly in consensus on our position on cuts", he said, adding that OPEC hoped oil prices would stabilize later this month. Those output cuts, in place since the start of the year, have lent prices some support, but in recent weeks rising output from Libya and Nigeria - OPEC members exempt from the output reduction deal - has pushed supply higher. We also expect to see upward revisions in EIA gas demand data that was under-reporting demand earlier in the year.

US crude oil production, meanwhile, has proven more resilient to historically low crude oil prices than initially expected as operators in the shale basins in the Lower 48 become more efficient.

On the impact of the slow production on Nigeria's budget, Mr. Kachikwu said with projected 2.2 million barrels and benchmark price of price of $42.50 per barrel approved in the budget, the country lost about four months due to delay in the approval of the budget. Global oil inventories are forecast to be relatively unchanged in the second half of 2017 before returning to average inventory builds of 0.2 million b/d in 2018. However, the geopolitical uncertainty could quickly cut production levels once again. But Qatari ships will be barred from using Egyptian ports and the economic zone in the canal. Although the EIA reported drawdowns in inventories, it also reported a rebound in production figures, dashing hopes that output was on the decline.

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On Tuesday, the American Petroleum Institute (API) noted that USA crude oil inventories were down by 8.1 million barrels, bringing the stockpiles to 495.6 million barrels, a number which may indicate that the current supply gut is beginning to recede.

While the research shows some forced adjustment to the era of lower oil prices, it also hints at more pain to come by pouring cold water over the optimism surrounding oil producers' attempts to diversify their economies. That's more than what most OPEC members export.

"We opine the industry is more focused on robust activity at stable oil prices, rather than very high oil prices at this juncture, which is not sustainable", it said. As of 2016, the USA average daily export rate was just 520,000 bpd, although in May, the average daily was 1.02 million barrels.

All in all market conditions remain weak.