OPEC Crude Production Slipped in February on Saudi, Venezuelan Reductions

Australian dollars in Sydney, Friday, Jan. 15, 2016. (AAP Image/Joel Carrett) NO ARCHIVING

In its Monthly Oil Market Report for March, released Thursday morning, the Organization of the Petroleum Exporting Countries (OPEC) noted that the cartel’s month-over-month average price for its reference basket rose by $5.09 (up 3%) to $63.83 a barrel in the month of February. Year to date, OPEC’s reference basket price is up $6.89 (12.1%) per barrel.

The cartel said OPEC production in February, as reported by secondary sources, dipped month over month by 221,000 barrels a day to a daily average of 30.55 million barrels, about 1 million barrels a day less than December 2018 production of 31.58 million barrels. Saudi Arabia’s February production fell to 10.09 million barrels a day, a month-over-month decrease of 86,000 barrels a day. Iranian production increased by 12,000 barrels a day to around 2.74 million barrels, and Venezuelan production dropped by 142,000 barrels a day to about 1.01 million barrels.

The Saudis themselves reported total production of 10.14 million barrels a day in February, down by about 106,000 barrels a day compared to January. Venezuela reported a decline of 56,000 barrels to a total of 1.43 million barrels a day.

Russian production averaged a record 11.35 million barrels a day in 2018, and February production rose to 11.53 million barrels. OPEC is estimating average daily Russian production in 2019 will reach a new record of 11.49 million barrels a day.

OPEC now forecasts average 2019 global demand of 99.96 million barrels a day, basically unchanged from the previous month’s estimate. The current estimate for 2019 global demand growth is 1.24 million barrels a day, also unchanged from last month’s estimate.

The cartel estimated 2018 non-OPEC supply rose by 30,000 barrels a day to 62.19 million barrels. For 2019 non-OPEC supply is expected to increase by 2.24 million barrels a day to an average of 64.43 million barrels, an increase of 60,000 barrels a day compared with last month’s estimate for the current year.

U.S. production in 2019 is now expected to rise to 18.45 million barrels a day, up by 10,000 barrels from last month’s forecast. That reflects a U.S. supply growth rate of 1.8 million barrels a day (up 10.8%) year over year.

2018’s estimated demand for OPEC crude was lowered to 31.5 million barrels a day, down by some 100,000 barrels a day compared to last month’s estimate. Demand in 2019 is now estimated at 30.5 million barrels a day, down by around 1.1 million barrels from the 2018 level.

Crude prices continue to trend higher Thursday morning, with West Texas Intermediate for April delivery up about 0.6% at $58.61 a barrel and Brent for May delivery up about 0.3% at $67.88.

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