Thursday, 19 July, 2018


Saudi oil output said to top 10 million barrels a day

Conrad Doyle | 13 June, 2018, 01:00

Oil prices were mixed on Tuesday, with USA crude gaining and Brent crude largely unchanged, as investors prepared for a key meeting of the OPEC producer group next week.

"Non-OPEC supply is expected to rise sharply in 2019, led by U.S. shale growth, along with Russia, Brazil, Canada and Kazakhstan", U.S. bank JPMorgan said.

Saudi Arabia's output rose by 85,500 barrels per day in May, according to the cartel's monthly report out Tuesday.

That suggests US crude output, already at a record 10.8 million bpd, will climb further.

At 0325 GMT, July WTI crude oil is trading $66.12, up $0.02 or +0.03% and August Brent crude oil is at $76.39, down $0.07 or -0.09%. OPEC kept its global demand expectations steady.

Overall OPEC production rose by 35,000 bpd to 31.87 million bpd as production fell in Nigeria, Venezuela and Libya, offsetting Saudi Arabia's gains.

"So were they to raise by 1 million bpd, then 1.3 million bpd is left, scraping the low end of the range historically and uncomfortably tight given the high and rising geopolitical disruption risk", McNally said.

On Monday, Iraq's oil minister said producers should not be influenced by pressure to pump more oil.

Riyadh pledged to pump no more than 10.058 million barrels a day under OPEC's output-cuts agreement with Russian Federation and other allies outside the group.

Exxon Mobil (XOM) shares dipped 0.8% to 82.46 on the stock market today. Chevron (CVX) eased 0.4% to 127.10.

"Sentiment is caught in a tug of war between the drop in supply from Iran and Venezuela and the prospect of rising output from OPEC/non-OPEC coupled with rampant U.S. shale production", said Stephen Brennock, analyst at brokerage PVM Oil Associates.

Based on the EIA definition, Robert McNally at consultancy Rapidan Energy Group said Saudi Arabia, Russia, Kuwait and United Arab Emirates together had spare capacity of about 2.3 million bpd.

Consultancy Energy Aspects said Gulf OPEC members would likely add less than 1 million bpd immediately, rising to about 1.5 million bpd in three to six months.

OPEC kingpin Saudi Arabia in January publicly floated the idea to extend the cooperation agreement which was struck by 24 OPEC and non-OPEC producers in late 2016 to trim output to shore up prices. However, Reuters sources said the two sides are looking at raising production by 1 million bpd.

A day before US President Trump pulled out of the Iran nuclear deal, a senior official of the Trump Administration phoned Saudi Arabia to ask it to help keep oil prices stable should the US decision on Iran disrupt oil supply.

Before the United States withdrawal from the Iran nuclear deal, the Saudi position was that the cuts would remain in place until the end of this year, as planned, even if OPEC were to overtighten the market.

But Kuwait and Iran are reportedly concerned about the agreement between Saudi Arabia and Russian Federation.

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