The Organization of Petroleum Exporting Countries raised crude output in May to the highest level in six months while keeping its demand forecast for 2013 unchanged because of risks to the global economy.
OPEC increased production by 106,000 barrels a day to 30.57 million a day last month, led by gains in Saudi Arabia, the group said today in its monthly market report, citing secondary sources. Global oil demand will increase by 780,000 barrels a day, or 0.9 percent, this year to 89.7 million a day, in line with estimates in the previous report.
“Existing fundamentals portray a market with ample supply,” the group’s Vienna-based secretariat said. “Looking at the second half of the year, the world economy is expected to experience slightly higher growth. However, risks are skewed to the downside.”
Consumption climbs at the end of the second quarter because of peak summer demand for driving fuels in the northern hemisphere, and higher electricity use in the Middle East to power air conditioning units. Economic stagnation in Europe as well as threats to the recovery in the U.S. and emerging nations is restraining oil demand growth, OPEC said.
Brent crude traded at about $102 a barrel on the London-based ICE Futures Europe exchange today, having declined about 8 percent this year.
Saudi Arabia, the organization’s biggest member and de facto leader, accounted for most of the group’s increase last month, compensating for lower output from Iran, Libya and Nigeria. The desert kingdom raised production by 143,400 barrels a day to 9.4 million a day, a six-month high, data from secondary sources cited in the report showed. Iranian output fell most, declining 37,700 barrels a day in May to 2.6 million. Libya’s output dropped 27,300 barrels a day to a two-month low of 1.4 million barrels a day.
“What’s most telling is that OPEC has been holding production elevated through all the spring weakness,” Bjarne Schieldrop, chief commodity analyst at SEB AB, said by phone from Oslo. “The action of OPEC is creating a bearish picture.”
Daily group production of 30.57 million barrels is approximately in line with the average amount OPEC estimates it will need to provide in the second half of the year, at 30.5 million. It’s still higher than the organization’s current official target of 30 million barrels, ratified for a third time at OPEC’s most recent meeting on May 31.
In addition to supply estimates based on secondary sources, OPEC’s monthly report also includes production data submitted directly to the secretariat by member nations. Saudi Arabia’s direct submission puts the kingdom’s output in May at 9.66 million barrels a day.
Total inventories of crude and refined products in developed nations are in line with their five-year average after expanding for a second month in April, by 19.2 million barrels to 2.7 billion, the report showed. Crude supplies are at a “comfortable level,” it said.
The organization left estimates for supplies from outside the group in 2013 unchanged. Non-OPEC producers, led by the U.S., Canada and Brazil will bolster output by 1 million barrels a day this year to 53.96 million, according to the report.
OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. They will meet next on Dec. 4 in Vienna.
The International Energy Agency, an adviser to oil-consuming nations, will publish its monthly estimates of supply and demand tomorrow.