Nigeria's Oil Production Hits Highest Volume in 12 Months

"In 2018, we expect non-Opec production to grow. slightly more than the expected increase in global demand", the International Energy Agency wrote in its latest monthly report.

"Although oil prices rebounded from five-month lows in (mid-May), following positive U.S. jobs data and assurances by Saudi Arabia that Russian Federation is ready to join OPEC in extending production adjustments to reduce a persistent supply glut", OPEC said in its monthly report Tuesday.

In a report on Wednesday, the International Energy Agency said rising US output will contribute to supply growth exceeding demand growth in 2018.

"Our first outlook for 2018 makes for sobering reading for those producers looking to restrain supply", the Paris-based agency said in its report.

Both benchmarks are hovering near levels last reached in late November previous year when production cuts led by the Petroleum Exporting Countries (OPEC) were first announced in an effort to prop up prices.

That means an entrenched market glut that has kept a firm lid on oil prices is likely to persist, despite disciplined efforts by most OPEC producers to rein in their own output.

USA crude stockpiles dropped by 1.66 million barrels last week, the EIA reported Wednesday.

The API showed a rise of 1.8 million barrels of gasoline supply, while inventories of distillates were down 1.5 million barrels.

The continuous rise in the United States production further negated the impact of restriction in oil production.

Qatar crisis will have a very little impact on global oil prices as the country is not a major producer of Oil.

The oil market needs strong demand to help offset the rapid increase in supply.

Trade data show OPEC shipments to customers averaged around 26 million bpd in the last six months of 2016 and are set to average around 25.3 million bpd in the first half of this year. Production rose by 12,000 barrels a day to 9.33 million barrels a day. Crude output rose while nationwide inventories fell less than predicted. Still the increase in supply, breaking the API's 9-week drawdown, is raising concerns as to whether the USA oil market is going to continue to see a drop in oil and overall supply.

Opec's pledge was to cut 1.2-million barrels per day, while other producers including Russian Federation agreed to bring the total reduction to nearly 1.8-million barrels per day. However, some OPEC members including Nigeria and Libya have been exempt from cutting, and their rising output undermines efforts led by Saudi Arabia.

The American Petroleum Institute signaled USA inventories probably climbed a second week, ahead of data from the Energy Information Administration forecast to show a decline.

  • Zachary Reyes