OPEC Oil Output Hits One-Year High in August on NigeriaMark Shenk
OPEC crude oil production increased to a one-year high in August, led by surging output in Nigeria, a Bloomberg survey showed.
Production by the 12-member Organization of Petroleum Exporting Countries rose by 891,000 barrels a day to 31.033 million, according to the survey of oil companies, producers and analysts. Last month’s total was revised 80,000 barrels a day lower to 30.142 million because of changes to the Nigerian and Iranian estimates.
Nigeria, Saudi Arabia and Angola led gains as new deposits came online, security improved and field maintenance programs ended. Iran and Venezuela were the only members to record production declines.
“They are letting it rip,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. “The geopolitical scares out there have supported the market some but any resolution would remove that. We’re heading for a definite downtrend in prices if these volumes hold up.”
Brent crude for October settlement rose 73 cents, or 0.7 percent, to close at $103.19 a barrel on the London-based ICE Futures Europe exchange. Brent is the benchmark grade for more than half the world’s oil. West Texas Intermediate oil for October delivery climbed $1.41, or 1.5 percent, to settle at $95.96 a barrel on the New York Mercantile Exchange.
Nigeria’s production climbed 380,000 barrels a day to 2.3 million in August, the most since January 2006. It was the biggest one-month gain in data going back to 1989. Output is often disrupted by unrest in the Niger River delta, the country’s main oil-producing region, leading companies to declare force majeure, a legal step that protects them from liability when they can’t fulfill a contract for reasons beyond their control.
“Nigeria is up a lot and a lot of the force majeures expired,” Amrita Sen, chief oil market analyst for Energy Aspects Ltd. in London, said by phone. “There were no real disruptions this month, which in the case of Nigeria is a big deal.”
Nigeria deployed aircraft to check sea piracy, illegal bunkering and oil theft, Warredi Erisuoh, director shipping development for the Nigerian Maritime Administration and Safety Agency told reports in Lagos on Aug. 19. Forces arrested 16 suspected oil thieves July 22, Nigerian Economic and Financial Crimes Commission spokesman Wilson Uwuja said in an emailed statement Aug. 1.
Royal Dutch Shell Plc started production from its first well at the Bong North West deep-water field on Aug. 5, the company said in an e-mail.
Saudi Arabia, the group’s biggest producer, bolstered output by 160,000 barrels a day to 9.98 million, the highest level since September, when the desert kingdom pumped 10 million.
Saudi Arabian Oil Co. delayed the start of natural gas production at the Wasit project, which was planned to be online this summer. This forced the kingdom to burn more crude for power generation than expected. Oil demand in the Arabian Peninsula peaks in the summer months, when high temperatures increase use of air conditioners.
“The Saudis haven’t dialed back yet,” Kilduff said. “It was thought that they would cut output to make room for Iran and Iraq. The situation in Africa has calmed down as well, which is also boosting supply.”
Angolan output increased by 140,000 barrels a day to 1.75 million, the third-biggest gain this month. Total SA started pumping crude at the CLOV site in Block 17 in June, and targets production to ramp up to 160,000 barrels a day.
Libyan output climbed by 100,000 barrels a day to 500,000 this month, the fourth straight increase. It was the highest production level in a year. Several oil fields increased output this month and all ports were open and operating normally with the exception of Zueitina, where there’s a labor dispute.
The North African country pumped 1.59 million in January 2011 before the uprising that led to former leader Muammar Qaddafi’s ouster and subsequent killing that year.
Iraqi production increased 90,000 barrels a day to 3.09 million this month, according to the survey. Iraq is the second-biggest producer in the group. The advance of Islamic State, a militant group fighting in Iraq and Syria, has spared Iraq’s south, home to about three-quarters of its crude output.
OPEC ministers kept their output target unchanged at 30 million barrels a day on June 11 in Vienna. The group is scheduled to meet next on Nov. 27.