🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

OPEC signals larger 2017 oil surplus, unless cuts implemented

Published 14/12/2016, 13:18
© Reuters. OPEC logo is pictured ahead of an informal meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) in Algiers
LCO
-

By Alex Lawler

LONDON (Reuters) - OPEC on Wednesday signalled a growing oil supply surplus next year unless members implement their deal to curb output from record levels and outside producers also deliver on cutback pledges made at the weekend.

The Organization of the Petroleum Exporting Countries pumped 33.87 million barrels per day (bpd) last month, according to figures OPEC collects from secondary sources, up 150,000 bpd from October, OPEC said in a monthly report.

OPEC's own figures show the group's output has continued to rise, adding to a global glut, ahead of the January start of its first supply cut agreement since 2008. This could raise questions about its ability to comply fully with the deal.

But OPEC was hopeful that supply curbs pledged by Russia and other non-members at the weekend, in addition to its own reductions, will tackle the surplus and support prices, which at $55 a barrel (LCOc1) are still half the level of mid-2014.

The non-OPEC cuts should help to "accelerate the reduction of global inventories and bring forward the rebalancing of the oil market to the second half of 2017," OPEC said in the report.

To speed it up, OPEC last month finalised a plan to cut output by about 1.20 million bpd from Jan. 1 to 32.50 million bpd. On Saturday, non-member countries pledged curbs of around 560,000 bpd in the first such move since 2001.

The report is the latest to show output hitting new peaks. The November OPEC production figure is the highest since at least 2008, according to a Reuters review of past OPEC reports.

OPEC's figures show more than two-thirds of November's extra barrels came from Libya and Nigeria, both of which are exempt from cutting output because their production has been curbed by conflict. Total output is 1.37 million bpd above the new target.

In the report, OPEC raised its forecast of non-OPEC supply slightly in 2017 to 300,000 bpd, although it said the forecast was under review following Saturday's meeting.

With the demand for OPEC crude in 2017 expected to average 32.63 million bpd, the report indicates there will be an average surplus of 1.24 million bpd if OPEC keeps output steady. Last month's report pointed to a 950,000 bpd surplus.

© Reuters. OPEC logo is pictured ahead of an informal meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) in Algiers

OPEC did not give a detailed forecast of the outlook if all parties cut supply as promised. The International Energy Agency said on Tuesday the market could show a shortfall of 600,000 bpd early next year in this scenario.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.