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Global surplus oil capacity inches up in Oct

New York, November 2, 2013

Global spare crude oil production capacity rose slightly in September and October as Saudi Arabia trimmed output on lower power plant demand, said the US Energy Information Administration in its report.

The spare output capacity, which is the amount of oil that global producers can quickly bring on line without major investment and a key factor in global crude prices, averaged 1.8 million barrels per day in September and October, the Energy Information Administration said.

It was 200,000 bpd higher than in the previous two months, it said, as Saudi Arabia, the country with the world's most space capacity, cut production.

The kingdom did not pump as much oil in the last two months, averaging 9.9 million bpd, because power producers there reduced their practice of burning crude to generate electricity, the EIA said. In addition, Saudi Arabia had produced more oil in July and August to replace outages in Libya and other places.

The EIA report, a copy of which was obtained ahead of its publication, does not include spare capacity in Iran. The report is required by sanctions law on Iran to be sent to Congress every two months.

US and European sanctions over Iran's disputed nuclear program have combined to roughly halve the Islamic Republic's oil exports to 1 million bpd since 2012.

Although the spare oil capacity rose slightly in the last 60 days, it was 300,000 bpd lower than the same period a year ago, the EIA said.

Iran's crude oil output averaged 2.8 million bpd in September and October, the same as in the previous two months, the EIA said. Its overall liquid fuels production was 3.5 million bpd, up 100,000 bpd from July and August. Iran's liquid fuels output remained well below the three-year average of 4 million bpd.

Global oil demand fell in September and October by an average of 500,000 bpd compared with the previous two months.

That is "consistent with the seasonal pattern marked by both the end of the US driving season and the easing of oil use for electricity generation in the Middle East," the report said.

The EIA revised down its previous estimate of spare oil output capacity in July and August to 1.7 million bpd from 2.2 million bpd due to the higher-than-expected Saudi output during those months.-Reuters

Tags: US | Iran sanctions | Oil demand |

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