Opec Aug oil output to hit 3-year high
London, August 31, 2011
Opec's oil output is expected to rise in August to its highest in almost three years due to an increase in Nigerian exports and smaller rises from Saudi Arabia and other Gulf producers, said a Reuters survey.
Supply from all 12 members of the Organization of the Petroleum Exporting Countries is expected to average 30.15 million barrels per day (bpd) this month, up from 30.07 million bpd in July, the survey of sources at oil companies, Opec officials and analysts found.
The survey indicates no sign of Saudi Arabia and other Gulf countries cutting back on the supplies they provided to offset the loss of Libya's exports. Consumers, paying over $100 a barrel for Brent crude, will welcome any extra output.
'The market appears well supplied now,' said Christophe Barret, global oil analyst at Credit Agricole. 'It seems that Saudi Arabia is continuing to produce a lot.'
August's total is expected to be Opec's highest since October 2008, shortly before Opec agreed to a series of supply curbs to combat recession, based on Reuters surveys. July's total was also the highest since October 2008.
Opec's Gulf members boosted supplies unilaterally after African countries, Iran and Venezuela blocked a Saudi-led proposal to increase output targets at Opec's last meeting, which was held on June 8.
The group still has a way to go to close the gap completely between its production and forecast demand. Opec expects demand for its oil to average 30.88 million bpd in the second half of 2011.
The biggest change this month is in Nigeria, where supply has risen sharply.
Loading programmes showed Africa's top exporter would export about 2.25 million bpd, its highest since January 2006, most of which has been shipped.
An Aug. 23 declaration of force majeure on Bonny Light crude exports by Royal Dutch Shell's Nigerian unit was expected to have little impact on supplies in August.
Saudi Arabia has raised output by a further 50,000 bpd this month, the survey found. Sources in the survey said increased refinery processing and use in domestic power plants were the main factors for the increase.
Other Gulf producers Kuwait and the United Arab Emirates have also nudged up supplies.
Output has fallen in several Opec members this month, including its second-largest producer Iran.
The biggest fall was in Angola, where supply slipped back after a boost in July. Output is expected to rise in coming months as new fields open such as Total's Pazflor, which started up earlier than expected.
Iranian supplies slipped further due to a pipeline fire and an oil sales payments dispute with India, which Iran says is now resolved.
Libya's production declined to a nominal 10,000 bpd in August, although the collapse of Muammar Gaddafi's rule has raised hopes supplies will resume soon. Pre-war output was 1.6 million bpd.
A delegate from a Gulf Opec country said last week the Gulf members are unlikely to reduce output in the early phases of a Libyan supply restart because it is unclear how long a significant recovery will take.
Some survey participants say a slide in prices would focus minds in Opec on supply curbs. Budgetary requirements in Saudi Arabia have risen after setting aside billions for extra social spending to prevent social unrest.
'The Opec countries, even the strong ones, need higher prices than before,' said an oil analyst who declined to be named. 'I'd expect them to cut if prices started moving towards $90 for Brent.'
Opec has not officially changed its output policy since cutting output by a record 4.2 million bpd in December 2008 to 24.84 million bpd for 11 members, all except Iraq, to combat falling prices and a collapse in demand.
Since the June meeting, Opec officials have acknowledged the target is no longer valid as supply is so much higher.
Opec does not provide timely official production figures so the oil industry relies on outside supply estimates from news agencies, consulting firms and government organisations.-Reuters