|
Getting your Trinity Audio player ready...
|
Crude-oil future which is the benchmark of Nigerian crude, traded slightly lower early Tuesday as a report on monthly oil output from the Organization of the Petroleum Exporting Countries (OPEC) indicated higher production from the cartel led by swing producer Saudi Arabia.
OPEC oil production increased by 35,000 barrels a day in May, month-on-month, to average 31.87 million barrels a day, the cartel said Tuesday in its closely watched monthly report.
The report which cited secondary sources said output in Saudi Arabia jumped by 85,500 barrels a day but was partly offset by production outages in Nigeria, Venezuela and Libya.
OPEC’s top producer said it hiked output by 161,000 barrels a day in May which brought the Saudis’ monthly production to just over 10 million barrels a day, pushing it towards the ceiling it agreed to in November, 2017.
The monthly OPEC report comes amid news stories saying that Saudi Arabia, the world’s swing producer and the most influential of OPEC’s members, was ramping up production, along with non-OPEC member Russia.
Signs of rising output also come as a coordinated effort to tamp down a global glut of crude and stabilize a downturn in oil futures from a 2014 peak is set to expire at the end of 2018. A gathering of OPEC members on June 22 likely will feature discussion on the outlook for production curbs.
Geopolitical risks to supply in Iran and Venezuela two OPEC members prompted the Saudis and Russians to reconsider the output curbs in recent weeks after the international contract exceeded the symbolic $80 a barrel threshold.
The oil cartel’s overall output was relatively steady, rising by about 34,000 barrels a day to nearly 31.9 million barrels a day, according to independent sources cited in OPEC’s monthly report. That total reflects a Saudi output figure slightly lower than the kingdom reported itself, and a monthly jump that was roughly half as large.
Looking ahead, the release Wednesday of the International Energy Agency’s monthly oil-market report, as well as weekly data on U.S. petroleum inventories from the Energy Information Administration are in focus.
However, reports of a possible arrangement between Washington and Riyadh appear to be fueling a rift between OPEC members that want to keep the deal in place and those who want to consider raising output.
Earlier last week, news surfaced that the U.S. government asked Saudi Arabia to boost output to relieve pressure on prices. But Reuters followed up with a report on June 7, adding more context to that story. According to Reuters, a high level Trump administration official called Saudi Arabia a day before Trump was set to announce the U.S. withdrawal from the Iran nuclear deal, asking for more oil supply to cover for disruptions from Iran.
The last time the U.S. government pressured OPEC into adding supply, it was also over Iran. The Obama administration wanted the cartel to offset disrupted Iranian production, after an international coalition put stringent sanctions on Iran in 2012. Roughly 1 million barrels per day were knocked offline.
While the Trump administration’s request might irk OPEC members, with Iran obviously the most aggrieved, the apparent willingness of Saudi Arabia to comply with Washington’s request has ignited furor from within the group.
