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Cracks show in OPEC's plan to curb oil supplies

Cracks show in OPEC's plan to curb oil supplies

On the adherence to the oil production cut posed by the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC members, the minister said Nigeria's production level was unpredictable as to guarantee when it will join the deal which is meant to stabilise oil price.

The IEA's report said that compliance with the agreement, which brought in ten non-cartel countries, including Russian Federation, in the hope of dampening oversupply, fell to 78 per cent last month, down from 95 per cent in May.

The American Petroleum Institute reported an 8.1-million-barrel drawdown in U.S. crude oil inventories, compared to the Reuters forecast of a 3.2 million barrels decline.

Further growth of 1.4 million barrels per day is foreseen for 2018, with global demand reaching 99.4 million barrels per day.

"Each month something seems to come along to raise doubts about the pace of the rebalancing process".

"There are high supplies of low-sulphur crude because Nigeria is exempted" from the Opec cuts, he said.

The agency forecast non-OPEC supply would grow by a combined 2.1 million b/d over 2017 and 2018, led by the US.




He said: "In terms of the budget impact, definitely, I mean, it is predicated on the number of 2.2 million barrels per day and a price index of $42.50". The agency added that would still "mark the highest annual average production in US history".

It left its 2017 forecast unchanged on 9.33 million barrels a day, where United States production now sits.

Similarly, the US EIA has also cut its WTI forecast for 2017 from $50.78 per barrel to $48.95 per barrel and for 2018 from $53.61 per barrel to $49.58 per barrel.

OPEC wants an "orderly recovery" in oil production from Libya, Nigeria and Iran and has a flexible output target under its cuts agreement to accommodate more crude from the three member nations, the group's Secretary-General Mohammad Barkindo told Bloomberg Television on Wednesday at a conference in Istanbul.

Libya's output has risen to 1.05 million barrels a day, or 45,000 barrels a day more than the country was pumping at the beginning of July, according to a person with direct knowledge of the matter who asked not to be identified for lack of authorization to speak to the media.

The Senior Analyst at Interfax Energy's Global Gas Analytics Abhishek Kumar said in London: "U.S. gasoline demand remains lackluster and gasoline stocks are still above the five-yea average, which will cap gains in crude and gasoline prices".

But there's a lone bull. UBS commodity analyst Giovanni Staunovo said last week that Brent could rally to $US60 a barrel by the end of this year, partly because he sees a chance USA production will be weaker than everyone expects.


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