Opec members kept production relatively stable last month

OREANDA-NEWS. Opec members kept production relatively stable last month, and well above an agreed target, against a backdrop of rising prices.

Output fell by 30,000 b/d to 31.24mn b/d. Leading supplier Saudi Arabia produced 10.15mn b/d, slightly lower than March production of 10.3mn b/d. Saudi oil minister Ali Naimi said on 8 April that his country's oil output would "remain at approximately 10mn b/d". April marks the tenth month that Opec output has exceeded its 30mn b/d target. Iran wants Opec to target production of 28.5mn b/d. "Even the most conservative Opec member states do not believe that Opec production should exceed 30mn b/d," Iranian oil minister Bijan Namdar Zanganeh said.

Iraq, Iran, Libya and Nigeria produced a collective 210,000 b/d more in April than in March. Iraqi production rose by 50,000 b/d to 3.75mn b/d — its highest since the 1980s — buoyed by a 50pc increase in shipments of northern Iraqi crude through the Kirkuk-Ceyhan pipeline. Iran's production rose by 50,000 b/d as demand from its Asia-Pacific customers increased.

Libyan output rose by 50,000 b/d thanks to higher production at fields in the Sirte basin, although flows fell by 80,000 b/d at the end of April as unrest led to the shut-in of the Elephant field. Nigerian output rose by 60,000 b/d as production of key export grade Qua Iboe rebounded after field maintenance ended in March. This helped compensate for reduced Angolan output, which fell by 50,000 b/d because of a 10-day shutdown at the Greater Plutonio offshore platform.

Lower production by the Mideast Gulf members was reflected in a drop in loadings from northern Gulf terminals in April. Tanker sailings from Saudi Arabia, Kuwait and southern Iraq fell, particularly to destinations west of Suez, data from consultancy Oil Movements showed. Shipments from the Saudi-Kuwaiti Neutral Zone also fell, Oil Movements said. Kuwaiti output fell for a second month as a spat between Kuwait and Saudi Arabia over the management of Neutral Zone fields prevented essential maintenance at the Wafra field. The field produced an estimated 180,000 b/d last month, but is expected to shut down completely by mid-May.

Naimi also said on 8 April that he expected a price rise "in the near future". Atlantic basin crude benchmark North Sea Dated rose by more than \$10/bl in April, and has since hit a five-month high of above \$66.50/bl. Saudi Arabia wants an oil price that is fair for consumers and producers, and one that provides the oil market with stability, Naimi said on 28 April.

Forecasting agencies are increasing their projections for global oil demand growth. The IEA raised its forecast for 2015 global oil demand growth to 1.08mn b/d in mid-April, against a backdrop of improving macroeconomic indicators, up from 990,000 b/d in March. This brings it closer to Opec's oil demand growth forecast of 1.17mn b/d for this year. And oil market participants such as BP and Vitol have forecast higher demand growth this year. The IEA has made a 50,000 b/d upward revision to its call on non-Opec crude for the second half of 2015 to 30.35mn b/d.

Crude supplies from outside Opec are less plentiful, the IEA said. Unrest in Yemen has shut in 60,000 b/d, and the outlook for US oil production growth has dimmed. The IEA in mid-April revised its expectations for US output growth this year down by 40,000 b/d compared with its March figure, putting growth at 710,000 b/d, amid declines in drilling rates and a backlog of uncompleted wells.