OPEC oil cut adherence rises in Dec as Venezuela output slides – survey

0
404
Barrels of refined oil and lubricant additives sit on shelves in the storage yard at Rock Oil Ltd.'s factory in Warrington, U.K., on Monday, March 13, 2017. Oil declined after Saudi Arabia told OPEC it raised production back above 10 million barrels a day in February, reversing about a third of the cuts it made the previous month. Photographer: Chris Ratcliffe/Bloomberg via Getty Images

LONDON (Reuters) – OPEC deepened compliance with an oil supply-cutting deal in December due to a further decline in Venezuelan output and extra cuts by Gulf exporters, a Reuters survey found, showing strong commitment to the deal despite higher prices.

Adherence to the curbs rose to 128 percent from 125 percent in November, the survey found. The United Arab Emirates for the first time since the deal took effect in January 2017 pumped below its OPEC target, joining Saudi Arabia and Kuwait.

The Organization of the Petroleum Exporting Countries is reducing output by about 1.2 million barrels per day (bpd) as part of a deal with Russia and other non-OPEC producers. The pact will run until the end of 2018.

Oil hit its highest since May 2015 this week, supported by falling inventories, strong demand and high OPEC compliance. Many producers, still suffering from a 2014 price collapse, are enjoying the rally and the extra revenues.

“We are all pleased about it,” one official in an OPEC country said of the early 2018 price rise.

The survey shows no sign of producers boosting output to cash in on higher prices or to replace the decline in Venezuela, where output is dropping amid an economic crisis.
ADVERTISING

In the past, waning compliance as oil prices rallied has reduced the effectiveness of OPEC accords.

Top exporter Saudi Arabia trimmed output by 60,000 bpd, according to sources in the survey who cited stable to lower exports and lower refinery processing, putting supply further below the kingdom’s OPEC target.

Production in Venezuela, where the oil industry is starved of funds due to a cash crunch, has fallen further below its OPEC target, the survey found. Both exports and refinery operations were lower in December.

The UAE, the incoming OPEC president, has cut production further and delivered its highest adherence yet, according to Reuters surveys. The UAE was a laggard on compliance for most of 2017, compared to peers like Saudi Arabia.

“The UAE has the OPEC presidency this year and they feel they should try to do better,” said an industry source, who has discussed the issue with OPEC officials.

Libyan output slipped by 30,000 bpd, hampered by damage to a pipeline in a suspected attack and other outages.

Among countries with higher output, the biggest rise came from Nigeria, whose exports in December were set to reach a 21-month high, although actual shipments fell short of that level.

The second-largest came from Iraq. A boost in exports from Iraq’s south, the outlet for most of its crude, to a record 3.55 million bpd in December, offset relatively low shipments from the north, the survey found.

Output in northern Iraq is still down after falling in mid-October when Iraqi forces retook control of oilfields from Kurdish fighters who had been there since 2014. This has had the side-effect of boosting Iraqi compliance.

Algerian output rose after a reduced impact from planned oilfield maintenance.

OPEC in late 2016 announced a production target of 32.50 million bpd. The target includes Indonesia, which has since left OPEC, and does not include Equatorial Guinea, the latest country to join.

According to the survey, output in December has averaged 32.28 million bpd, about 530,000 bpd above the target adjusted to remove Indonesia and not including Equatorial Guinea.

With Equatorial Guinea, production in December totalled 32.41 million bpd, up 20,000 bpd from November. The November total was revised down by 90,000 bpd to the lowest since April 2017, according to Reuters surveys.

The Reuters survey is based on shipping data provided by external sources, Thomson Reuters flows data, and information provided by sources at oil companies, OPEC and consulting firms.

Additional reporting by Rania El Gamal; Editing by Edmund Blair

SHARE
Previous articleSouth Africa’s rand slips as investors book profits
Next articleAngola to hold forex auction Tuesday as it ends dollar peg: sources
Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.