Wednesday, 26 September, 2018

Saudis Push for OPEC Oil Efforts Into 2019

Crude production of 9.9m bpd in US is now at highest level in nearly 50 years Crude production of 9.9m bpd in US is now at highest level in nearly 50 years
Nellie Chapman | 22 January, 2018, 10:36

Thus, non-OPEC supplies were seen growing by 1.7m barrels a day in 2018, the IEA said, with production in the States likely overtaking that of Saudi Arabia and closing in on Russia's. "We need to be talking about a longer framework for our cooperation", Faleh said before a meeting between OPEC and non-OPEC countries in Muscat.

Mr. Falih-the de facto leader of OPEC-gave the most explicit call for the 14-nation cartel and 10 nonmember allies to keep supporting the oil market into 2019.

Crude production of 9.9 million barrels per day in the USA was now at the highest level in almost 50 years, "putting it neck-and-neck with Saudi Arabia, the world's second largest crude producer after Russia", it said.

The draw on global stockpiles should resume in the second quarter, even amid rising Opec output, according to Energy Aspects.

Oman's oil minister Mohammed bin Hamad al-Rumhi said producers would discuss in November whether to renew their supply agreement or enter a new type of agreement. When this is exactly what will happen, "time will show", he said.

OPEC, in its Monthly Oil Market Report for January released on Friday, put Nigeria's output at 1.861 million bpd for December, from 1.785 million bpd in the previous month, according to secondary sources.

On the back of that news, West Texas Intermediate crude oil futures for next month delivery jumped 0.91% to $63.37 a barrel on NYMEX, alongside a 1.06% drop in RBOB gasoline futures to $1.8636 a gallon.

Mr. Falih dismissed shale producers as a threat, saying investments in their business in recent months were "hyped". In addition, the US Energy Information Administration has said that US unconventional shale oil output is expected to rise next month to 6.55mn bpd.

"I think we have to identify more clearly what is the normal level because five-year average - which five-year?"

Mr. Falih said cooperating beyond the current agreement's ending in December 2018 "doesn't necessarily mean sticking barrel by barrel to the same to the same limits or caps or targets of production country by country that we signed up to in 2016".

If oil inventories increase in 2018 as some in the market expect, producers may have to consider rolling the supply cut agreement into 2019, but the exact mechanism for cooperation next year has not yet been decided, Falih said.

Indications emerge yesterday that the Organisation of oil producing countries (OPEC) and non-members including Russian Federation and Oman may want a supply cap of 1.8 million applied to global production in 2016 to stay past December 2018. Mr. Falih said the group was cutting more oil than agreed-though its efforts have been helped along by the collapse of OPEC member Venezuela's economy and energy industry.