OPEC crude output drops in February, 2018 demand growth revised up

LONDON (ICIS)–Oil production by OPEC member states dropped in February on the back of falling Venezuelan output, while global oil demand growth expectations for 2018 were revised up, according to the production cartel on Wednesday.

OPEC revised up its global crude oil demand growth forecasts for 2018 to 1.6m bbl/day on the back of firming consumption in both OECD and non-OECD regions, according to its latest market report.

Crude output by OPEC member countries dropped by around 77,000 bbl/day in February, according to secondary estimates, despite higher Nigerian and Angolan production, due in large part to a 52,400 bbl/day drop in Venezuelan crude on the back of the country’s ongoing economic and political woes.

OPEC’s overall share of the global crude market dropped by 0.2 percentage points during the month to 32.8%.

Full-year 2018 production by OECD Americas countries was revised up by 212,000 bbl/day to 1.63m bbl/day, driven by the US onshore boom.

However, the group warned of potential for current robust levels of global economic growth could weaken as a result of numerous central banks starting to move away from unconventional monetary policy measures.

Central banks in many regions flooded the system with stimulus spending and cheap cash as a means of supporting financial stability, and the return to more conventional monetary policy may place a brake on the speed of growth, OPEC said.

Some countries have reached or temporarily exceeded the theoretical ceilings on their growth capacity, and others, including the UK and India, have underperformed, placing additional question marks of the sustainability of the current rally.

“In addition to these limitations, the most recent US announcement to impose tariffs on steel and aluminium, as well as the potential consequences of the US fiscal stimulus on the nation’s debt may dampen the growth momentum,” OPEC added.

Venezuela’s crucial oil industry has been hit hard by economic turmoil in the country on the back of delayed payments, US sanctions and low investment.

President Nicolas Maduro has resorted to increasingly unorthodox measures in a bid to stabilise the country and the sector, launching last month a cryptocurrency called the Petro tied to the value of Venezuelan crude compared to local currency the Bolivar.