OPEC Reports First Oil Production Drop In 4 Months As Deal Compliance Slides

Tyler Durden's picture

Confirming Monday leaks that OPEC production had dipped last month, the just released OPEC report for the month of September confirmed that in September, OPEC produced 32.755mmb/d (according to secondary source data), a drop of 79,100 bpd, and the first monthly decline in 4 months.  According to the underlying data, in the last month output increased in Nigeria (+138.3Kb/d), while declining in Libyam Gabon, Venezuela and Iraq. Saudi Arabia.

While secondary sources pegged Saudi production in August at 10.022mmb/d, a drop of 10.3kb/d in the past month, the Saudi self-reported number was 9.951mmb/d, not a nominal difference and a drop of nearly 60kb/d from the Saudi self-reported 10.01mmb/d July number, perhaps indicating that the Saudis are trying a little too hard to demonstrate compliance with the production cut agreement.

In the same report, OPEC boosted global oil demand growth in 2017 to 1.42mmbpd, an upward revision of 50kb/d from last month's estimate, predicting that the impact of Hurricane Harvey on demand will be “negligible”, with disruption offset by rebuilding activity. Demand for OPEC crude in 2017 is estimated at 32.7mmb/d, roughly 0.5mmb/d higher than the 2016 level. 2018 demand is now seen at 98.1m b/d, with growth rate revised up by ~100k b/d to 1.35m b/d.

At the same time, OPEC also raised estimates for the amount of crude it will need to supply next year by 400k b/d to 32.8m b/d. OPEC expects non-OPEC supply to grow by 0.78mmbpd in 2017, unchanged from the previous month due to offsets between Kazakhstan and the US.  OPEC also cut its forecasts for growth in non-OPEC supply next year by 100k b/d amid lower expectations for Russia and Kazakhstan; total non-OPEC is projected to expand by 1m b/d to 58.8m b/d in 2018.

From the report:

Based on the current global oil supply/demand balance, OPEC crude in 2017 was revised up by 0.2 mb/d from the previous report driven mainly by the upward revision in demand. Within the quarters, the second quarter was revised up by 0.3 mb/d, while the first, third and fourth quarters were revised up each by 0.2 mb/d. As a result, OPEC crude is estimated at 32.7 mb/d, representing an increase of 0.5 mb/d from the 2016 level. The first and the second quarters increased by 0.9 mb/d and 0.3 mb/d, respectively, while the third and fourth quarters are expected to grow by 0.3 mb/d and 0.4 mb/d, respectively.

 

Similarly, OPEC crude in 2018 was revised up by 0.4 mb/d from the previous month. Within the quarters,
the first quarter was revised up by 0.1 mb/d, while the second, third and fourth quarters were revised up by
0.5 mb/d, 0.6 mb/d and 0.5 mb/d, respectively. OPEC crude is estimated at 32.8 mb/d, which is around
0.2 mb/d higher than the 2017 level
. The first quarter is expected to increase by 0.4 mb/d, while the second
and the third quarters are expected to increase by 0.1 mb/d and 0.2 mb/d, respectively. The fourth quarter is
estimated to remain unchanged compared to the same quarter in 2017.

Finally, the 11 OPEC members disclosed an 83% compliance rate with the production cuts, down from last month's 86%. Iraq was the least compliant on output cuts, with a self-reported August output of 4.38mmb/d, below the secondary sources print of 4.45, and above the quota of 4.35mmb/d.

Separately, earlier today a Bloomberg report said that OPEC is "said to discuss output-cut extensions longer than 3 months." In other words, we are back to the old "blast a soundbite and hope it pushes the price of oil higher" game.

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_RRR_'s picture

compliance? they still use the word?

Dukes's picture

A self-reported decline of 0.2% daily production?

OPEC, making news and moving prices with their iron-clad integrity.

sudzee's picture

Wonder how much oil is being sold in currencies other than USD. Report 10mm barrels in USD with production much higher. 

Five Star's picture

The OPEC production cuts have been more than completely offset by rising US production. Combined US OPEC production has never been higher.

http://thesoundingline.com/combined-us-opec-oil-production-pace-set-new-...

RagaMuffin's picture

Kinda like 83% pregnant

Bonaparte's picture

How about the US saying that all Yuan users must buy US products  in Yuan, all else petrodollar. Cash in yuan for Red Chinese gold. 

 

oak's picture

yearly world-wide driving season is over.

BritBob's picture

Falklands Oil

By a ruling of the UN, Argentina will extend its maritime platform (Politica Argentina) ; New map of the maritime platform reaffirms the sovereignty of Malvinas with UN endorsement (ElCronista); Argentina enlarges its territory 35%, with a UN endorsement ...(La Capital).To add to this euphoric atmosphere the Argentine Foreign Minister stated, ''This is a historic opportunity for Argentina. We have taken a great step in the demarcation of the outer limit of our continental shelf; the most extensive boundary of Argentina and our border with humanity,'' Foreign Minister Susana Malcorra told La Nacion, which tomorrow will publicly announce the details of this resolution. (Susana Malcorra, quoted by Dinatale M, La Nacion, Argentina, 27 March 2016).

 

But what is the truth...

Argentina's Continental Shelf Claims and The UN CLCA Commission (1 page):-

https://www.academia.edu/33898951/Argentinas_Continental_Shelf_Claims_-The_UN_CLCS_Commission