London, 12 April 2010 - OilAndGasNewsOnline.com
Total Opec crude oil supply rose in March as an increase in Nigerian output overshadowed a dip in Iraq, a Reuters survey showed, as members with agreed production targets reduced compliance to just 50 per cent. Supply from the 11 members of the Organization of the Petroleum Exporting Countries with output targets, all except Iraq, is averaging 26.93 million barrels per day (mbpd), up from a revised 26.73 mbpd in January, according to the survey of oil firms, Opec officials and analysts.
The survey implies Opec is now making just half of promised supply cutbacks agreed in December 2008 versus 55 per cent in February. Oil prices have doubled in the past year to more than $80 a barrel, encouraging members to pump more crude.
Total Opec supply rose 40,000 bpd to 29.25 mbpd, the survey found, with Nigerian output jumping by more than 100,000 bpd as domestic refineries resumed production.
Opec’s two largest producers, Saudi Arabia and Iran, both increased production by 50,000 bpd to 8.2 mbpd and 3.75 mbpd respectively. An Opec Gulf delegate told Reuters the group was concerned about rising prices.
“Prices above $85 for a sustained period of time could well be harmful. We have to be aware that the economic recovery is still fragile,” the delegate said on the sidelines of the International Energy Forum in Cancun, Mexico.
Separately, another Gulf delegate said Opec would raise oil production if oil prices stayed “too high” for a long time.
Opec compliance with agreed output quotas peaked at 81 per cent in April and March 2009, according to Reuters estimates. The worldwide recession had seen prices crash from a peak of almost $150 a barrel in July 2008 to near $40 a barrel at the start of 2009.
Opec output is now at its highest level since December 2008.
Oil prices eased after the survey but were supported by expectations of a recovery in the global economy. Prices are within $2 of the 2010 high of $83.95 a barrel hit early January.
“The bullish case for oil in both the short and medium term is being predicated largely on the view that oil demand growth in China (and the non-OECD nations generally) will be sufficient to rebalance supply and demand,” Deutsche Bank analyst Adam Sieminski said, adding demand in developing nations could grow by 1.4 mbpd this year.