OPEC Drops Oil Production First Time since March to Drain Global Glut

Opec managed to cut its oil production last month for the first time since March
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MARK RALSTON  Getty Images

Estimates from market intelligence firm Genscape showed an inventory growth of 1.2 million barrels in Cushing last week, said market sources who saw that data on Monday.

"Non-Opec oil supply is expected to grow by 0.78 mpbd in 2017, unchanged from the last month due to offsetting revisions in Kazakhstan and United States supply".

According to the report, the value of Iranian heavy crude was further lifted buoyed again by an uplift in OSP offsets and supported by healthy global sour markets.

The Gulf of Mexico's production also dropped by 70,000 bbl/d from July, averaging 1.6 MMbb/d for August.

Two months ago after a ministerial committee meeting monitoring compliance with the deal, made up of officials from OPEC and those outside the cartel such as Russian Federation said that Nigeria has voluntarily agreed to join the OPEC imitative of production curb and will put a cap on country's production at 1.8 million barrels per day.

Before the EIA report, benchmark West Texas Intermediate (WTI) crude for October delivery traded up about 1.1% at around $48.74 a barrel, and it traded at $47.78 shortly after the report's release.

“Irma will have a negative impact on oil demand but not on oil production
“Irma will have a negative impact on oil demand but not on oil production" Goldman Sachs warned

Brent crude rose 53 cents or 0.9 percent to $54.37 per barrel by 11:56 a.m.(1556 GMT).

The Organization of the Petroleum Exporting Countries (OPEC) has lowered its forecast for oil production in Russian Federation in 2018 by 70,000 barrels per day to 11.18 mln barrels per day, according to OPEC report.

"In 2018, non-OPEC oil supply is forecast to grow by 1.0 mb/d, following a downward revision to Russian Federation and Kazakhstan, totalling 0.1 mb/d".

OPEC's crude output fell in August for the first time in five months on renewed turmoil in Libya, with the cartel's production decreasing by 0.21 million bpd to 32.67 million bpd.

USA crude production rebounded last week to an average of 9.4 million barrels per day from 8.8 million bpd a week earlier, entirely the result of increases in the lower 48 states. This comes as all reporting agencies saw an improvement in OPEC compliance, even OPEC themselves. The EIA also raised their USA oil demand forecast to 20.38 million barrels a day up from 20.3 million barrels. Total volume traded was about 3% below the 100-day average.

"Based on recent bets made by investors, expectations are that markets are tightening and that prices will rise, albeit very modestly", the IEA said. Refinery output continued to fall in the wake of Hurricane Harvey, causing gasoline stocks and distillate inventories to drop as well.

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