The Organization of Petroleum Exporting Countries (OPEC) might prevent a price-depressing build in oil inventories, once it attains 100 percent compliance with its new crude oil supply cut accord, while also counting on continued production declines in Iran and Venezuela. OPEC and 10 allies led by Russia agreed Friday to a six-month, 1.2 million barrels per day production cut from October production levels starting January 2019, with OPEC cutting 800,000 barrels per day of the aforementioned figure.
According to the cartel’s monthly oil market report, the forecast call on OPEC crude for quarter one of 2019 is 31.67 million barrels per day, rising to 31.77 million barrels per day in quarter two, OPEC said in its report. It also said that the cuts “should contribute to sustainability of market stability.”
However, full compliance from OPEC would still leave the cartel some 500,000 barrels per day above expected demand for its crude for the first quarter of 2019 and 400,000 barrels per day above the call for the second quarter, OPEC’s analysis arm said Wednesday in its closely watched Monthly Oil Market Report.
The supply cut deal, exempted sanctions-hit Iran and economically distressed Venezuela, whose production is expected to decline significantly in the months ahead. That could help bring down the projected oversupply. Libya, whose production levels have been erratic due to internal instability, was also exempted from the cuts.
OPEC pumped 32.97 million barrels per day in November, according to secondary sources, a 10,000 barrels per day decrease from October.
The report also showed that global demand, was kept unchanged at 100.08 million barrels per day for 2019, an expected growth of 1.29 million barrels per day from 2018’s level.
Nigeria self-reported a massive 300,000 barrels per day monthly increase in production to 1.94 million barrels per day in November, the report said, though secondary sources estimated output much lower at 1.74 million barrels per day.
Saudi Arabia, the organization’s largest member, produced 11.02 million barrels per day in November, secondary sources estimated, while Iran fell to being OPEC’s fourth-largest producer in November, dropping behind the UAE, as its production plunged 380,000 barrels per day month on month to 2.95 million barrels per day in November, according to secondary sources.
Iraq, OPEC’s second largest producer, pumped 4.63 million barrels per day in November, according to secondary sources, but self-reported 4.46 million barrels per day and the UAE saw its production surge 70,000 barrels per day month on month to a record high of 3.25 million barrels per day, secondary sources estimated. It self-reported an even higher figure at 3.34 million barrels per day.
However, Venezuela continued its steady decline, with output dropping 50,000 barrels per day in November to 1.14 million barrels per day, according to secondary sources, an all-time low except for a labor strike that almost halted production in late 2002 and early 2003. The country self-reported a November output figure of 1.46 million barrels per day.