x Abu Dhabi, UAETuesday 25 July 2017

OPEC quota compliance at lowest in a year

The OPEC members' compliance with their oil output quotas fell to 53 per cent last month, the lowest level in a year.

The OPEC members' compliance with their oil output quotas fell to 53 per cent last month, the lowest level in a year. A steady rebound in crude exports by the group controlling roughly 40 per cent of global oil supplies started last May, after compliance with OPEC's pledge to cut output by 4.2 million barrels per day (bpd) peaked at about 80 per cent the previous month. It has continued even as the outlook for global oil demand remained clouded.

"Required demand for OPEC crude is forecast to remain almost at the same level as last year, following two consecutive annual declines," the group's secretariat said yesterday in its latest monthly oil market report. "The global recovery is proceeding apace, led by manufacturing, but the strength of the upturn in 2010 is still uncertain and regionally uneven," it added. "The slower pace of recovery in US demand, despite positive economic signals, is a key uncertainty for oil demand growth this year."

Production by the 11 OPEC members bound by quotas rose last month by 148,000 bpd to about 26.8 million bpd. The group's compliance has slipped by almost half, as most of its members have sought to benefit from crude prices that have more than doubled in the past year. Crude traded close to US$74 per barrel on the New York Mercantile Exchange yesterday, up from a $32 per barrel low last February. It had fallen sharply from an all-time high of $147 the previous July, prompting OPEC to promise cuts equivalent to about 5 per cent of global demand.

Angola and Venezuela raised their oil output the most last month, respectively pumping 133,000 bpd and 105,000 bpd more than in December, OPEC said in its report. Nigerian crude exports fell by 124,000 bpd as militants continued to attack oil and gas installations and kidnapped foreign oil workers in the country with Africa's second-biggest oil reserves. Iraqi output declined last month by 85,000 bpd, OPEC said, after sabotage attacks ruptured the country's northern export line. Iraq is the only OPEC member not bound by a production quota.

Crude output by the UAE, which has had one of the highest records of OPEC quota compliance this past year, was flat last month compared with December. Saudi Arabia, the biggest OPEC exporter, has recently informed customers in Asia, Europe and North America to expect steady crude volumes next month, as it had pledged to this month. So far this year, Saudi Aramco, the national petroleum company, has shipped fully contracted crude volumes to most of its Asian customers with long-term contracts, after reducing supplies for most of last year.

The kingdom's oil production edged up by 5,000 bpd in January from December's level. OPEC has kept its output target unchanged since late December 2008, following the record series of cuts announced in the last four months of the year. The group's next meeting is scheduled for March 17 in Vienna, but top officials have said a decision to raise quotas would be unlikely if crude prices remained near recent levels.

@Email:tcarlisle@thenational.ae