Iraq Oil Flow to Slump as Maintenance Helps With OPEC Cut Pledge

The Organization of the Petroleum Exporting Countries and other exporters including Russian Federation have agreed to cut output by nearly 1.8 million barrels per day (bpd) during the first half of 2017 in a bid to rein in a global fuel supply overhang.

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Despite OPEC on the edge of record conformity of 90% in reducing oil production, this week’s EIA oil inventory report released bearish data. In 2017, oil production will continue to grow by 30,000 bpd in Congo as well as in South Africa, Ghana and Chad. Permian production could account for most of the gains in USA shale oil production, which has in general proven more resilient to lower crude oil prices than initially expected.

On Thursday, Oil prices held their position inspite of rising fuel inventories and crude production in the USA, due to the ongoing supply cuts initiated by the producer group OPEC.

OPEC reached an agreement on November 30 to cut production from January by 1.2 million barrels a day to end a persistent oil glut.

Nigeria’s problems with production are linked to attacks on installations by militants in the Niger Delta region.

As the chart below illustrates, the total US oil rig count is being led higher by the rebound in the Permian.

OPEC delivered 82% of its promised cut of 1.17 million barrels per day (MMbbl/d) in January according to Reuters, but as much as 98% according to Argus.

“Any better-than-anticipated performance of the global economy, together with less crude price volatility will support oil demand, helping to accelerate the rebalancing in the oil market to the benefit of both consumers and producers”, the report added. Their logic is that over-production caused lower oil prices and lower output should bring markets into production-consumption balance. Visit MarketWatch.com for more information on this news.

“After 2026, tight oil production remains relatively constant through 2040 in the Reference case as tight oil development moves into less productive areas and as well productivity decreases”. The U.S., as a whole, produces just shy of 9 million b/d. He assured his audience that, “as Opec has indicated many times, there is no shortage of oil anywhere in the world, even with the partial absence of production from one of Opec’s member countries”. Top exporter Saudi Arabia, keen to make the deal work, said it cut output by more than the amount called for by the agreement. “Asia is being barraged with higher volumes from Saudi Arabia as they cut volumes to the slow-demand-growth west in order to not lose their grasp on the epicenter of demand growth in the east”. OPEC says it has achieved 93% compliance with supply quotas as part of a deal with Russian Federation. The chart below from the WSJ today highlights how exempt members from OPEC are helping to offset some of the good work from those complying.

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Kuwait- There are two factors affecting the oil market nowadays, according to the oil Historian and Analyst Daniel Yergin. Anthony Starkey is a manager of energy analysis for Platts Analytics, a forecasting and analytics unit of S&P Global Platts.

Crude oil futures slid Monday as OPEC production cuts are tempered by rising U.S. output