Thursday, November 17, 2016

Nigeria, Libya Recovery Takes OPEC Production to New High 
NOVEMBER 14, 20168:31 PMI
By Sebastine Obasi with Agency
Nigeria Vanguard

ORGANISATION of Petroleum Exporting Countries, OPEC, crude output rose by 230,000 barrels per day to a record 33.83 million barrels per day, mb/d, in October after production recovered in Nigeria and Libya and flows from Iraq hit an all-time high, the International Energy Agency, IEA, stated.

IEA also highlighted the significant tasks ahead for OPEC if the oil cartel is to freeze or cut its production and boost the price of the commodity. “We can see the scale of the task ahead,” the Paris-based organization said in its latest monthly report.

Investors are said to be eagerly awaiting the outcome of OPEC’s meeting, scheduled for November 30, after its members pledged at their last meeting in Algiers to cut oil production by as much as 2 percent. This proposed production ceiling would be between 32.5 mb/d and and 33 mb/d.

Proposed output range It explained that output from the group’s 14 members had climbed for five months running, led by Iraq and Saudi Arabia. In October, OPEC supply stood at  nearly 1.3 mb/d above what it was a year ago, it added. “OPEC members pumped, well in excess of the high end of the proposed output range. This means that OPEC must agree to significant cuts in Vienna to turn its Algiers commitment into reality. It further said: “Unfortunately for those seeking higher prices, an analysis of the other components provides little comfort,” IEA added, highlighting that output was increasing in Russia, Brazil, Canada and Kazakhstan.

“Total non-OPEC output will rise by 0.5 mb/d next year, compared to a fall of 0.9 mb/d in 2016. This means that 2017 could be another year of relentless global supply growth similar to that seen in 2016.

If no agreement is reached on November 30 then the market is expected to remain in surplus throughout the year and if this persists in 2017 there “must be some risk of prices falling back,” according to the IEA. Price of oil collapsed from near $120 a barrel in June 2014 to below $30 early this year before recovering to around $50 and then a fall back to around $46 more recently.. Weak demand, a strong dollar and booming United States oil production have all been seen as reasons for the dramatic fall, as well as OPEC’s reluctance to cut.

The IEA also reaffirmed its view that oil demand peaked at a five-year high of 1.8 mb/d in 2015. It still predicts that demand growth would ease to 1.2 mb/d in 2016 due to sharp slowdowns in the Organisation for Economic Corporation and Development, OECD Americas and China.   He said, “I will not like to join issues with NNPC on this matter. I was at that event. I am yet to get a grasp of what Mr Kyari said.

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