OPEC Reports First Oil Production Drop In 4 Months As Deal Compliance Slides
Confirming Monday leaks that OPEC production had dipped last month, the just released OPEC report for the month of September confirmed that in September, OPEC produced 32.755mmb/d (according to secondary source data), a drop of 79,100 bpd, and the first monthly decline in 4 months. According to the underlying data, in the last month output increased in Nigeria (+138.3Kb/d), while declining in Libyam Gabon, Venezuela and Iraq. Saudi Arabia.
While secondary sources pegged Saudi production in August at 10.022mmb/d, a drop of 10.3kb/d in the past month, the Saudi self-reported number was 9.951mmb/d, not a nominal difference and a drop of nearly 60kb/d from the Saudi self-reported 10.01mmb/d July number, perhaps indicating that the Saudis are trying a little too hard to demonstrate compliance with the production cut agreement.
In the same report, OPEC boosted global oil demand growth in 2017 to 1.42mmbpd, an upward revision of 50kb/d from last month’s estimate, predicting that the impact of Hurricane Harvey on demand will be “negligible”, with disruption offset by rebuilding activity. Demand for OPEC crude in 2017 is estimated at 32.7mmb/d, roughly 0.5mmb/d higher than the 2016 level. 2018 demand is now seen at 98.1m b/d, with growth rate revised up by ~100k b/d to 1.35m b/d.
At the same time, OPEC also raised estimates for the amount of crude it will need to supply next year by 400k b/d to 32.8m b/d. OPEC expects non-OPEC supply to grow by 0.78mmbpd in 2017, unchanged from the previous month due to offsets between Kazakhstan and the US. OPEC also cut its forecasts for growth in non-OPEC supply next year by 100k b/d amid lower expectations for Russia and Kazakhstan; total non-OPEC is projected to expand by 1m b/d to 58.8m b/d in 2018.
Finally, the 11 OPEC members disclosed an 83% compliance rate with the production cuts, down from last month’s 86%. Iraq was the least compliant on output cuts, with a self-reported August output of 4.38mmb/d, below the secondary sources print of 4.45, and above the quota of 4.35mmb/d.
