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July 12, 2016

Crude prices surge 4 percent on easing pledged from Central banks, though output outlook remains gloomy

Crude prices surge 4 percent on easing pledged from Central banks, though output outlook remains gloomy

OPEC’s crude output rose by 300 thousand b/d to the record high level of 32.73 million b/d since August 2008 year, reports S&P Global Platts as a result of a survey of cartel representatives and industry experts.

The largest increase in production recorded in Nigeria at 150 thousand b/d. However, it is rather about restoring previous production levels, because the country’s production dropped to a minimum for 30 years in May because of military attacks.

Output in Libya has increased by 60 thousand b/d to 310 thousand b/d, but production facilities are loaded less than a quarter from their capacity (1.6 million b/d).

Iran boosted its oil production to a record high 3.63 million b/d close to pre-sanctions level. Since December last year, the country boosted production by 740 thousand b/d.

Meanwhile production in Venezuela in June collapsed by 120 thousand b/d to the lowest since February 2003 of 2.15 million b/d. Decline of production is a result of insufficient investment, high cost, debt and reducing the country’s oil and gas companies drilling activity.

Platts S&P analysts note that production in Venezuela is not expected to recover soon.

Iraq has reduced production by 20 thousand b/d due to decline in the southern oil fields.

According to preliminary data the total volume of oil production in the world in June compared to May grew at 0.4 million barrels per day up to 94.33 million barrels. While production in the countries of the Organization of petroleum exporting countries (OPEC) increased by 264 thousands and in countries outside the organization – by 0.13 million barrels per day. This is stated in a July OPEC report on Oil output and consumption.

The document stated that an important factor in the growth of oil prices in June were disruptions in supply worldwide, “resulting in international oil futures rising in June, despite the outcome of the referendum on British membership in the EU,” the report said.

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