INTERACTIVE: OPEC crude output drops for first time in months
Tom Brown
12-Sep-2017
LONDON (ICIS)–OPEC crude oil output dropped in August,
the cartel said on Tuesday, for the first time in several
months, while projected global economic growth for the year
was revised up.
OPEC crude production dropped 79,000 bbl/day month on month
in August to average 32.76m bbl/day, on the back of lower
output in Libya, Gabon, Venezuela and Iraq helping to offset
an increase in oil pumped in Nigeria during the period.
Global oil supply also declined during the month, according
to preliminary estimates, OPEC added, with a 0.32m bbl/day
average fall in non-OPEC output driving a 0.41m bbl/day month
on month drop to an average of 96.8m bbl/day. Representing a
decline from June levels, the figure is 1.66m bbl/day higher
than supply in August 2016.
The group also increased its forecast for global economic
growth in 2017 by 0.1 percentage points to 3.5%. This could
drive firmer oil demand growth, according to OPEC secretary
general Mohammad Sanusi Barkindo.
“Alongside this positive [OPEC cut agreement] conformity
story and the ongoing destocking process, another optimistic
indicator going forward is global oil demand growth,” he
said, speaking at the Oxford Energy Seminar in the UK on
Monday.
“It is estimated to increase by close to two million barrels
a day from the first to the second half of this year,” he
added.
US output capacity has also been cut for at least a short
period by the impact of Hurricane Harvey on the country’s oil
hub of Texas.
Hurricane Harvey led to the disruption of around 0.8m bbl/day
of production on the US Gulf production, significantly less
than the 1.4m bbl/day output curtailed during Hurricane
Katrina in 2005, representing 95% of capacity in the
region.
Offshore production has also been quicker to return than
during Katrina, OPEC said, but noted that the timeline for
the onshore Eagle Ford play to come fully back onstream
remains uncertain due to flooding in the region, the group
added.
World oil demand growth for the year was revised up 50,000
bbl/day to around 1.42m bbl/day due to better than expected
demand and economic growth for OECD countries, while growth
for 2018 was projected up 70,000 bbl/day from previous
estimates, OPEC added.
While demand may be stronger than expected and oversupply
falling, a worry for industry remains the prospect of
underinvestment as a result of producers reducing their
capital expenditure budgets in a bid to return to profit
following the drop in oil pricing in 2014, according to
Barkindo.
“While investments are expected to pick up slightly this year
and in 2018, it is clear that this is not anywhere close to
past levels and it is more evident in short-cycle, rather
than long-cycle projects, which are the industry’s baseload.
Additionally, we should remember that the actual volume
of conventional oil discovered across the globe has halved
over the past four years, compared to the previous four-year
period,” he said.
“As we have all learned from previous price cycles, such
pronounced and long-term declines in investments are a
serious threat to future supply. But given our
projected future demand for oil, the world simply cannot
afford a supply crunch.,” he added.
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