Thank you Libya? Why OPEC's output is finally on the rise after December low
OPEC reported its lowest output in over two years in December 2013 (File Archive)
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OPEC’s oil output has risen in January from December’s 2-1/2-year low, due to a partial recovery in Libyan supply and higher shipments from Iraq and Iran, a Reuters survey found on Friday.
Output from the Organization of the Petroleum Exporting Countries averaged 29.94 million barrels per day (bpd), up from a revised 29.63 million bpd in December, according to the survey based on shipping data and information from sources at oil companies, OPEC and consultants.
The survey illustrates the potential for OPEC supply to rebound in 2014 if Libya, Iraq and Iran sustain higher output. That could put pressure on oil prices without cutbacks from other members.
“Over the next few months, the big challenge for OPEC will be to respond appropriately to any further normalization of oil production in Libya,” said Carsten Fritsch, analyst at Commerzbank in Frankfurt.
In January, higher supply in Libya, more Iraqi exports and a further small rise in Iranian shipments outweighed reductions in Angola and Saudi Arabia. December production in Saudi Arabia, Libya and the United Arab Emirates was revised.
OPEC’s December output was the lowest since May 2011, when the group pumped 28.90 million bpd, according to Reuters surveys. Despite January’s increase, supply is below OPEC’s nominal target of 30 million bpd for a fourth straight month.
OPEC’s biggest increase came from Libya, as the El Sharara field restarted in early January after protesters ended a blockade. Still, output remains less than half of the 1.4 million bpd the country was pumping last year, and further recovery is by no means assured.
Iraq’s oil exports in January rose to 2.45 million bpd, due to higher shipments from southern ports despite some disruption from bad weather. Exports of Kirkuk crude through northern Iraq declined.
Iranian supply to market was estimated at 2.75 million bpd, up 50,000 bpd. The modest pickup is the third consecutive monthly rise, according to sources who track tanker movements, and adds to signs that the easing of sanctions on Tehran is helping it sell more crude.
The largest decline in OPEC was from Angola, whose output dropped 120,000 bpd because of reduced shipments of several crude streams including Girassol, Cabinda, Saturno and Palanca.
Saudi Arabia, industry sources say, trimmed output due to a reduced requirement for crude to fuel domestic power plants and lower demand outside the country - although December’s supply was higher than earlier thought.
“Exports have been lower than in December, with refinery runs flat and direct burn a bit lower,” said an industry source who tracks Saudi output. “So on balance, supply is down.”
Meanwhile, the price of oil slipped below $98 a barrel on Friday, backing off the 2014 peak it hit in the previous session on signs of stronger recoveries in the US and Japan.
By early afternoon in Europe, benchmark US crude for March delivery was down 43 cents to $97.80 in electronic trading on the New York Mercantile Exchange. On Thursday, the Nymex contract gained 87 cents to settle at $98.23, the highest close of the year.
Brent crude, used to set prices for international varieties of crude, was down 70 cents to $107.25 a barrel on the ICE Futures exchange in London.
The spread between the Nymex and Brent contracts has dropped below $10 for the first time since early November.
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