OPEC oil production climbs in May

OPEC’s crude oil production in May increased by 336,000 bpd from the previous month to average 32.14 million barrels per day (bpd), according to data from secondary sources, the Organization of Petroleum Exporting Countries (OPEC) said in its latest monthly report.

Crude oil output increased the most in Libya, Nigeria and Iraq, while production in Angola and UAE showed the largest declines, the report said.

Saudi Arabia’s production in May rose slightly to 9.94 million bpd, from 9.938 million bpd the previous month. The country’s output, however, was below the limit set under the production cap agreement earlier this year.

According to preliminary data, the world oil supply rose by 130,000 bpd on a month-on-month basis in May to average 95.74 million bpd, and was higher by 1.48 million bpd YoY, the report said.

The group said it expects non-OPEC oil supply to increase in the second half of this year by 500,000 bpd, compared to the first half, to average 58.4 million bpd.

“The US is the main driver behind this higher growth, contributing 0.76 million bpd, followed by Brazil and Canada,” OPEC said.

Some of this growth will be offset by lower production, mainly from Russia, China, Indonesia and Norway, it added.

Global oil demand, meanwhile, is also forecast to pick up in the second half of this year, with total consumption rising by 2 million barrels per day (bpd) to reach 97.4 million bpd, the report said.

This compares to a global demand of 95.4 million bpd in the first six months of 2017.

The total oil consumption in 2017 is anticipated to be around 96.38 million bpd, the report said.

The Organization for Economic Co-operation and Development (OECD) members is likely to see an increase in demand of around 0.2 million bpd year-on-year (YoY).

“OECD Americas, particularly the US, is the largest contributor to this growth as demand for transportation fuels receives an extra boost during the summer driving season,” OPEC said.

In the non-OECD region, oil demand is projected to rise by an average of 1 million bpd YoY in second half 2017, as consumption in India rebounds mainly from the negative impact of demonetization in the first half of the year.

China will also contribute to the demand growth, supported by developments in the petrochemical industry and transportation sector.

The decline seen in the overhang in OECD commercial oil inventories in the first four months of the year – from 339 million barrels to 251 million – is expected to continue in the second half, supported by production adjustments by OPEC and participating non-OPEC producers, OPEC said.

“These trends along with the steady decline in oil in floating storage, indicate that the rebalancing of the market is underway, but at a slower pace, given the changes in fundamentals since December, especially the shift in US supply from an expected contraction to positive growth,” the report said.

Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com