Thursday 12, January 2017 by Sarah Spendiff

OPEC oil output falls first time in seven months in December

OPEC output drops to 32.85 Mil B/D mostly driven by a decline in output from Nigeria, Saudi Arabia according to S&P Global Platts

OPEC output drops to 32.85 Mil B/D mostly driven by a decline in output from Nigeria, Saudi Arabia according to S&P Global Platts

 

Oil production from the Organization of the Petroleum Exporting Countries (OPEC) slumped 280,000 barrels per day (b/d) in December, due to hefty falls in Nigeria and Saudi Arabia, according to the latest survey of OPEC and oil industry officials and analysts by S&P Global Platts, the independent provider of information and benchmark prices for the commodities and energy markets. This is a month before the group's pledge to rein in production.

“There are some encouraging signs that OPEC will deliver on its promised output cuts, but the crucial question is whether OPEC and non-OPEC can make the compliance stick long enough to clear out the stock overhang. If both Libya and Nigeria post a swift output recovery and compliance starts to wane, the deal could unravel. A close eye will also be kept on the US shale oil industry, as it seeks a rebound in output amid higher oil prices” said Eklavya Gupte, senior editor for S&P Global Platts.

OPEC's 13 members saw their collective December output fall to 32.85 million b/d from 33.13 million b/d in November. Including Indonesia, which suspended its membership at the organization's last meeting, total December output was 33.57 million b/d, also down 280,000 b/d.

The producer group has agreed to cut 1.2 million b/d from its October output level for six months starting from January 1, and freeze production at around 32.5 million b/d, with the total including Indonesia. 

As part of global efforts to curb the crude supply glut, 11 non-OPEC countries led by Russia have also agreed to cut output by 558,000 b/d in the first half of 2017, with Russia shouldering the majority of that burden, with a 300,000 b/d reduction.

The December slide comes after OPEC reached a new production record in November and is the first fall in seven months as Saudi Arabia provides an encouraging sign that it is set to lead the cuts by example.

However, the main protagonist responsible for the fall in total output was Nigeria, which is exempt from the cut agreement, as it recovers from renewed militancy in the oil rich Niger Delta, while Iraq, OPEC's second-biggest producer, saw its exports rise sharply. Nigerian production fell to 1.44 million b/d from 1.68 million b/d in November, as planned maintenance halved loadings of its key export grade Agbami. The fall was exacerbated by a shorter export program, while strikes carried out by ExxonMobil employees resulted in deferrals of at least four cargoes of grades like Qua Iboe and Erha, aggravating the decline.

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