OPEC oil output falls further in February

OPEC crude oil production averaged 32.19 million barrels per day (bpd) in February, a decline of 77,000 bpd from the previous month, according to secondary sources.

While output mainly decreased in Venezuela, the United Arab Emirates and Iraq, this was somewhat offset by higher production in Nigeria and Angola, the producer group said in its latest monthly oil market report (MOMR).

Saudi Arabia pumped 9.982 million bpd in February, an increase of 5,600 bpd from the previous month, according to secondary sources.

Based on direct communication, the Kingdom’s output was 9.935 million bpd last month, a decline of 47,900 bpd from January.

For 2018, OPEC forecasts oil demand growth at around 1.6 million bpd, marginally higher than February’s projections, with total oil demand at 98.63 million bpd.

Oil demand growth in the OECD region was revised higher in Q1 2018, now showing growth of 0.32 million bpd for 2018.

In the non-OECD region, growth projections were also revised higher by 20,000 bpd in Q1, with growth of 1.27 million bpd anticipated in 2018.

Demand for OPEC crude this year is forecast at 32.6 million bpd, down by 0.2 million bpd from the previous assessment and 0.2 million bpd lower than a year earlier.

In terms of supply, non-OPEC supply is revised up by 0.28 million bpd for 2018, representing year-on-year (YoY) growth of 1.66 million bpd, with total non-OPEC supply reading 59.53 million bpd.

“The upward revision is mainly due to higher-than-expected output in Q1 by 360,000 bpd in OECD (Americas and Europe), FSU and China,” the report said.

The OPEC Reference Basket – a weighted average of prices of petroleum blends produced by OPEC members – dropped 5 percent month-on-month in February, lower for the first time in six months, to average $63.48 per barrel.

Meanwhile, oil prices were higher on Monday afternoon, with Brent crude up 0.6 percent at $65.04 per barrel, while WTI was 0.8 percent higher at $61.22/bbl.

In a note on Monday, Germany’s Commerzbank told investors that “rapidly growing US shale oil production is making it virtually impossible for prices to rise.”

The average monthly increase in US shale production in the eight months since September is 155,000 barrels per day, which would see shale oil production soar by 1.5 million barrels per day within a year – enough to cover the total increase in global oil demand.

“Thus OPEC has no scope to expand production from its current level,” Commerzbank said, adding that “in the current market environment an increase in OPEC production would generate another oversupply and weigh on oil prices.”