A surge in Libyan oil production in July sent total OPEC output higher by 172.6kbpd last month to 32.87mmbpd, the highest monthly production this year, as Saudi production also hit a 2017 high of 10.067mmbpd, up 31.8kbpd on the month the latest OPEC monthly market report revealed. Nigeria - which like Libya is exempt from the supply cuts agreed upon in last year's Vienna meeting - saw another month of rising crude production, with its total supply rising by 34.3kbpd to 1.748mmbpd. Meanwhile, oil production declined in Angola and Venezuela, while Iraq’s production fell by 33.1k b/d to 4.468m b/d, still above its agreed upon reduction target.
Surprisingly, while secondary sources estimated Saudi production at just under 10.1mmbpd, in the OPEC table listing production based on direct communication, the Saudi output number was missing for reasons unknown.
To offset the growing historical output, OPEC raised its forecasts for how much oil it will need to supply in 2017 and 2018 by ~200kbpd each, amid stronger-than-expected fuel consumption and weaker outlook for rival production. The oil cartel also lowered its estimate for rival supply by 50k b/d in 2017, 90k b/d in 2018, although it remains to be seen if shale has any intention of complying with this optimistic - for OPEC - prediction.
Preliminary data indicates that global oil supply increased by 0.17 mb/d m-o-m to average 97.30 mb/d in July 2017, compared with the previous month. The increase of non-OPEC supply (including OPEC NGLs) by 0.52 mb/d to average 64.49 mb/d was mainly driven by Canada, Norway, US, OPEC NGLs, Ghana, Colombia, Brunei, Africa other and Congo, which partially offset m-o-m declines in the UK, China, Mexico and Azerbaijan. OPEC crude oil production also increased by 0.17 mb/d in July, leading to an increase in global oil output. The share of OPEC crude oil in total global production slightly decreased by 0.1 pp to total 33.8% in July compared with 33.9% in June. Estimates are based on preliminary data from direct communication for non-OPEC supply, OPEC NGLs and non-conventional oil, while estimates for OPEC crude production are based on secondary sources.
Separately, in 2017, the report now estimates demand for OPEC crude at 32.42 mmbpd, 0.4mmbpd higher than in 2016 and up 200kbpd from the previous forecast. In total, OPEC now sees global oil demand growth rising by 1.37mmbpd, while non-OPEC oil supply growth was revised lower by 28kbpd at 0.78mmbpd, representing a total non-OPEC supply of 57.77mmbpd.
Yet what oil bulls will be most troubled with is the sharp decline in compliance: the latest OPEC figures mean the caretl complied only 86% with its output-cutting pledge, according to a Reuters calculation, down from 96 percent initially reported for June, a number which in recent months has been drifting lower.