Just as the Organization of Petroleum Exporting Countries, OPEC, pushes to rebalance markets through coordinated production cuts within its ranks and with other non-members, production from the group is witnessing an upward trend.
From the Cartels June monthly Oil Market Report it shows that the Organizations production grew 0.34 Million Barrels per day (MMBOPD ) to 32.1 MMBOPD in the month of May.
The bulk of the additions in May came from Nigeria and which added 174.2 MBOPD and 178.2MBOPD, respectively, to their overall production. Both countries are exempt from the current production cut deal as they look to regain production that has been lost due to civil war and attacks on oil and gas infrastructure. While the added production does not violate OPEC’s agreement, it does undercut the effect the group is trying to achieve as a glut of oil continues to put downward pressure
Prices have also faltered since OPEC and the non-OPEC producers who agreed to cut production along with the group extended their cuts nine months but did not deepen the amount of production they were taking off the market.
In its report, OPEC maintained its oil demand growth forecasts from last month as the group said world demand last year is expected to clock in at 1.44 MMBOPD while demand growth for 2017 should reach 1.27 MMBOPD for a total of 96.38 MMBOPD, both of which are in-line with the group’s previous report. The forecast for oil demand growth in China and India have also been left unchanged at 0.34 MMBOPD and 0.12 MMBOPD, respectively.
Currently, some crude sellers are facing obstacles finding buyers for the crude that has already been produced. The supertanker Saiq, chartered by Royal Dutch Shell (ticker: RDSA), is currently sitting 530 miles off the coast of the Canary Islands looking for a buyer, reports Bloomberg.
The ship originally intended to deliver some 2 MMBO of North Sea oil to China, but the country does not appear interested in making the purchase. This left the Saiq idling off the coast of Africa after it had already departed from its port of origin near Edinburgh. Shell went so far as to offer to do a ship-to-ship transfer all the way back in Scotland but was unable to find any interested buyers.
Production from non-OPEC producers including the United States is also expected to continue putting pressure on oil prices, according to the International Energy Administration. The group believes that total non-OPEC production will grow 700 MBOPD this year creating more supply for markets to absorb even as it looks for places to sell cargos like the one held aboard the Saiq.
Meanwhile, Nigeria’s crude oil exports are set to reach 1.84 million barrels per day (b/d) in July, according to a report. The new figure is slightly higher because of a recovery in Forcados exports, according to Nigerias loading programmes.
Forcados exports resumed at the end of May after a nearly complete shutdown since February 2016.
Meanwhile, the grade’s operator, Shell’s local subsidiary, Shell Petroleum Development Company, SPDC, issued an initial June schedule of 197,000 b/d. It, however, increased the schedule to 252,000 b/d.
By the resumption, Nigeria returns to the status of Africa’s largest oil exporter, a title it lost to Angola in 2016. The loss followed militant attacks on the nation’s oil infrastructure in the oil-rich Niger Delta region.
Production has since improved, following peaceful negotiations with leaders from the region. Angola’s July exports are expected to be 1.55 million b/d, Reuters reports. With a force majeure in place on Bonny Light and loading delays of as much as 10 days, Nigeria’s export plans for June and July are likely to change.