OPEC Oil Production Hits New All Time High As Brent Surges To 16 Month High

Tyler Durden's picture

The greatest trick OPEC ever pulled was convincing the world to buy oil even as production kept rising to new all time highs. Case in point, just out from Reuters:

  • OPEC NOVEMBER OIL OUTPUT RISES 370,000 BPD MONTH/MONTH TO 34.19 MILLION BPD, HIGHEST IN RECENT HISTORY - REUTERS SURVEY
  • SAUDI SUPPLY EDGES DOWN ON REFINERY MAINTENANCE AND REDUCED DIRECT CRUDE BURNING - REUTERS SURVEY
  • OPEC OUTPUT RISE LED BY ANGOLA; NIGERIA, LIBYA AND IRAQ ALSO PUMP MORE

Meanwhile, oil rose to fresh 16 month highs, with Brent rising above $55 for the first time since mid-2015.

More details from Reuters:

OPEC's oil output set another record high in November ahead of a deal to cut production, a Reuters survey found on Monday, helped by higher Iraqi exports and extra barrels from two nations exempted from cutting supply - Nigeria and Libya.

 

The latest rise in supply means the Organization of the Petroleum Exporting Countries will have a bigger task in complying with a plan to cut supply starting in 2017 - its first production-reduction deal since 2008. 

 

Supply from OPEC increased to 34.19 million barrels per day (bpd) in November from 33.82 million bpd in October, according to the survey based on shipping data and information from industry sources. Brent crude rose above $55 a barrel on Monday, trading at a 16-month high, on prospects of a tighter market next year following OPEC's deal. Prices are still half their level of mid-2014.

 

"OPEC's decision to cut production has removed a lot of downside risk for 2017," said Bjarne Schieldrop, chief commodities analyst at SEB, even though "some cheating is a natural habit among OPEC's members".

Based on the November survey, OPEC is pumping 1.69 million bpd above the 32.50 million bpd production target that it agreed last week to adopt from January 2017, following an outline agreement reached in September. This means that OPEC will need to find an addition half a million barrels to scrap to reach its "promised" quota.

November's supply from OPEC excluding Gabon and Indonesia, at 33.23 million bpd, is the highest in Reuters survey records starting in 1997. At last week's meeting, Indonesia suspended its membership again.

In November, Angola provided the largest supply boost as  planned maintenance on the Dalia crude stream ended. Output also climbed in Iraq due to record exports, lifting supply to 4.62 million bpd in November according to the survey.

Iran, which was allowed to raise output under the OPEC deal as sanctions had crimped its supply, pumped 40,000 bpd more. Indonesian output rose by 10,000 bpd.

Libya and Nigeria, both of which are exempt from the supply cut due to the impact on their output from conflict, boosted production in November.

Among countries with lower output, the biggest drop came from top exporter Saudi Arabia due to reduced crude use in power plants for air-conditioning, and lower refiner processing, sources in the survey estimated.

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.

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abyssinian's picture

Highest productions and low demands should drive oil price to $100+.  Makes perfect sense in this central banks maniuplation environment.   

Looney's picture

 

Was it a reference to Keyser Sausage?   ;-)

Looney

willpoi's picture

I Drink Your Milkshake!!!

froze25's picture

Good to see the cheating taking place, as it always does. Land Storage still filling, tic toc.

E.Shackle.Ton's picture

Guess it also means lower gas prices. (they are stable or lower in AZ since the OPEC "deal".)

King Tut's picture
King Tut (not verified) Dec 5, 2016 11:45 AM

fun-der-mentals. I love it when the ZH trader gurus give us their wiz-dum when stories like this reveal it is all Fed-induced BS.

conraddobler's picture

Bingo.

It is all a concocted reality that has no basis in reality.

It's all rigged.....

Why?

Well fucking DUH!

If it CAN be rigged and I think we can show that it can, then it is actually on those that say it's not to prove it's not because our default assumption to be consistent with human nature should ALWAYS BE if it can be rigged it is rigged.

NEOSERF's picture

It is only a magician's "trick" when you have an unbelieving and impartial audience....in this case, you have a bunch of greedy traders looking for alpha ignition fodder.

adr's picture

Reduced demand and increased supply leads to higher prices. 

The algos have changed the way economics works. The ones and zeroes only trade off trendlines and the headlines that move them. 

If headlines say production cut,  that means higher prices in the future and the machines buy because that should mean locking in profits. The other machines tag along for the ride and moves that should be one to two percent become moves of 20-30%.

conraddobler's picture

Yeah possibly or possibly it's all just levers and gears in a big RubeGoldberg machine they're running.

Simple game theory says that long ago these algo's should have been extinguished by predator algo's that chopped them up for behaving so stupidly.

It would evolve away from this and bankrupt the less advanced algo's and it should be easy to do and the fact they haven't done this means that it's not really a competitive market anymore it's just a narrative that we're being fed, or more simply a set of control levers.

Hohum's picture

OPEC's dead, Jim.  These countries are too desperate to do anything but put the pedal to the metal.

Rockfish's picture

Well I'm surprised. NOT.  Increased production and lower demand = higher prices. Genius 

 

Stan Smith's picture

OPEC is full of liars.

"Everything is Awesome."

A. Boaty's picture

At least none of the OPEC countries has an incentive to cheat on production quotas. Oh, wait...