Nigeria, Iraq cut OPEC’s output by 175,000bpd

Total crude oil production of the Organisation of Petroleum Exporting Countries (OPEC) fell by 175,000 barrels per day (bpd) to 32.38 million bpd in February, courtesy of output slide from Nigeria, Iraq and some other member countries.

Specifically, crude oil output declined by 94,200 bpd to 1.75 million bpd from 1.84 million bpd it recorded the previous month.

The nation’s output during the month under review has now made Angola in catching up with Nigeria in crude oil production.

While Angola’s production has been hovering around 1.66mbd and 1.74mbd, Nigeria has been finding it difficult to maintain its 2.2mbd production, due to pipeline vandalism and low investment by International Oil Companies (IOCs).

According to OPEC, which made this disclosure in its March Oil Market report released on Monday, countries like Iraq and UAE also contributed to the OPEC’s drop in crude oil output, while production increased in Iran, Saudi Arabia and Kuwait during the month under review.

Despite the fall in OPEC’s total crude oil production, it expects lower demand for the commodity this year, against earlier projection.

The oil cartel’s crude demand forecast was revised down by 100,000 bpd for the full-year, slightly lower than its estimate last month,

“In 2016, demand for OPEC crude is expected to stand at 31.5 million barrels per day, 0.1 mbpd, lower than last month, and representing an increase of 1.8 mbpd over the previous year.”

It said overall demand for oil, including sources outside OPEC, will increase by 1.25 million barrels per day, as it had said in February. However it mentioned that it considered some upward revisions to demand in “Other Asia, Asia-Pacific and Europe due to better-than-expected data.”

OPEC said its estimate for non-OPEC oil supply growth for 2015 was also raised by 110,000 bpd to 1.42 million b/d for an average of 57.09 million bpd.
The impact of widespread industry spending cuts are being offset by falling costs, causing the non-OPEC supply forecast in 2016 to become “more uncertain,” OPEC said.

“On the one hand, the oil market has witnessed lower capital expenditure on the part of IOCs, as well as a decline in the US rig count, higher output from legacy wells than new tight oil wells and increased geopolitical tension. On the other hand, there has been a reduction in production costs, mainly in the US, as well as increased hedging, with producers choosing to produce with losses rather than stopping production,” OPEC said.

OPEC also revised downward its estimate for US liquids production this year by 20,000 b/d from its previous report. In 2016, US total liquids output is now expected to decline by 420,000 b/d to average 13.57 million b/d, with the fall coming primarily from a “drop in tight crude production in different regions of the US.”