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Increased output in Nigeria, Middle East consolidates OPEC’s market share

By Roseline Okere
20 July 2016   |   1:52 am
The International Energy Administration (IEA) said that record pumping rates in the Middle East and recovering flows in Nigeria have helped to consolidate the Organisation of Petroleum Exporting Countries (OPEC) market share

OPEC

The International Energy Administration (IEA) said that record pumping rates in the Middle East and recovering flows in Nigeria have helped to consolidate the Organisation of Petroleum Exporting Countries (OPEC) market share

IEA, which made this declaration in its July oil market report, stated that global oil supplies rose by 0.6 mbpd in June, to 96 mbpd, after outages curbed OPEC and non-OPEC supplies in May, while production was 750 kbpd below as higher OPEC output only partially offset non-OPEC declines.

Non-OPEC supplies are set to decline by 0.9 mbpd in 2016, to 56.5 mbpd, before rising 0.2 mbpd in 2017.

According to the report, robust European demand supported second quarter 2016 global demand growth at around 1.4 mbpd year-on-year, momentum that will be roughly matched through the year as a whole.

It stated that a modest deceleration is foreseen in 2017, as growth eases to 1.3 mbpd taking average deliveries up to 97.4 mbpd.

IEA said that crude oil prices eased from an early June peak above $52/bbl, but traded within a $45-$50/bbl range.

The agency said that growing uncertainty over the global economy and the related dollar strength weighed, but the downside was limited by further declines in US production and inventories.

IEA stated: “OPEC crude output rose by 400 kbpd in June to an eight-year high of 33.21 mbpd, including newly re-joined Gabon. Saudi Arabia ramped up to a near-record rate of 10.45 mbpd and Nigerian flows partially recovered. Middle East producers sustained record pumping rates, consolidating market share and pushing OPEC’s total output 510 kbpd above one year ago.

“OECD commercial inventories built by 13.5 mb in May to end the month at a record 3 074 mb. Preliminary information for June suggest that OECD stocks added a further 0.9 mb while floating storage has continued to build, reaching its highest level since 2009.

“May global refinery throughput plunged by almost 1 mb/d from April, to 1.5 mb/d year-on-year, as heavy outages took their toll in many regions. This lowered the second quarter estimate for global refinery intake to 78.54 mb/d – the first year-on-year drop in three years. The forecast for third quarter throughput is more steady at 80.95 mbpd”.

Investment will also be important, as the IEA has regularly stated. Chevron’s announcement that it is moving ahead with a $37 billion expansion of the Tengiz field in Kazakhstan is good news, but the fact that the project will partly utilise existing infrastructure is key to making it viable at today’s oil prices.

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