Production from OPEC’s two largest producers falls slightly ahead of next meeting
OPEC’s monthly Oil Market Report (OMR) released today showed the group’s production was down slightly to 31.38 million barrels of oil per day (MMBOPD), 256,000 barrels per day lower than in its previous OMR. The group is still producing in excess of its self-imposed 30 MMBOPD production mark as we approach the one-year anniversary of OPEC’s decision to maintain production instead of defending crude oil prices.
The largest portion in the drop seen in OPEC’s production over the last month came from the group’s second largest producer, Iraq. Based on information from “secondary sources,” OPEC said production from Iran fell by 195.4 MBOPD to 4.1 MMBOPD. While the report didn’t specify a reason for Iraq’s decline, storms have disrupted loading at Basra oil terminal in the south of the country and sabotage attacks have reduced flows through the Kurds’ export pipeline in the north, reports Bloomberg.
The rest of OPEC’s November OMR should relatively little change from last month’s with the group leaving many of its predictions unchanged ahead of its December 4 policy meeting. World oil demand growth was left unchanged at 1.5 MMBOPD in 2015 to 92.86 MMBOPD, and 1.25 MMBOPD in 2016 to 94.14 MMBOPD. Supply changes were also left the same from October’s OMR, with Non-OPEC supply estimated to average 57.24 MMBOPD in 2015 and 57.11 MMBOPD next year.
OPEC Policy: what’s next?
Many believe that the group is likely to maintain its current strategy of defending market share over oil prices during its policy meeting in Vienna next month. OPEC Secretary General Abdalla el Badri indicated earlier this week that OPEC still sees market stability in 2016.
“We are following the market day in day out, month in month out. We see that 2016 is really producing some positive results,” he said at the Adipec oil and gas conference in Abu Dhabi Monday.
El Badri’s optimism was also reflected in OPEC’s OMR today, which said, “Strategic oil reserves have grown, as some countries including China and India have taken advantage of lower prices to add to their reserves, a trend that is likely to continue. In addition, a colder or longer than expected winter, as well as better than projected economic activities, could support incremental demand.”
“This would help alleviate the current overhang and support a recovery of crude oil prices in the coming months.”
Estimated demand for OPEC crude in 2015 remains at 29.6 MMBOPD, an increase of 0.6 MMBOPD over the previous year. In 2016, demand for OPEC crude is forecast at 30.8 MMBOPD, around 1.2 MMBOPD higher than in the current year and unchanged from the previous report.
