By March 14, 2017 Read More →

Oil stocks increasing, Saudis raise output: OPEC report

oil stocks

Despite an increase in global oil stocks, the OPEC report says “the market is expected to start balancing” by the second half of 2017. 

Global oil stocks rose 278 million barrels above five-year average

On Tuesday, OPEC reported that despite its efforts to curb oil production, global oil stocks have risen.

In its monthly report, OPEC showed Saudi production had increased in February by 263,000 b/d to 10.011 million b/d after January’s larger-than-anticipated supply cut by the kingdom.

According to the OPEC supply cut pact, many of its members agreed to curb production by 1.2 million b/d from Jan. 1.  Russia and other non-member nations agreed to cut their oil production by 600,000 b/d.

 

The OPEC report showed oil stocks in industrialized nations rose in January to 278 million barrels above the five-year average. The crude surplus was 209 million barrels and the rest was made up of refined products.

“Despite the supply adjustment, stocks have continued to rise, not just in the U.S., but also in Europe,” the OPEC report said.

“Nevertheless, prices have undoubtedly been provided a floor by the production accords.”

On Tuesday, oil prices fell following the release of the report.

 

Supply from the 11 OPEC members signed on to the accord fell to 29.681 million b/d in February.

Reuters says that means OPEC has complied by more than 100 per cent with its plan to lower output for those nations to 29.804 million b/d.

The OPEC report also showed an increase in the estimate of oil supply from non-OPEC producers this year as US shale drillers take advantage of higher oil prices.

The increase in non-OPEC activity is now expected to rise by 400,000 b/d, 160,000 b/d more than previously expected.  US shale activity was revised up by 100,000 b/d.

 

Despite the increase in stockpiles, OPEC says “the market is expected to start balancing or even see the start of a drawdown in oil inventories” in the second half of 2017.

 

The report also revised its forecast for world crude demand in 2017, saying the requirement for OPEC crude would average 32.35 million b/d – more than current production, suggesting stocks will drop if output does not rise.

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