Opec oil supply set for sharp drop


Opec oil supply is set to fall by 419,000 barrels per day (bpd) this month, a company that tracks Opec shipments forecast, reflecting plans for lower exports by Saudi Arabia and reductions by other producers.

The 14-member Organization of the Petroleum Exporting Countries has agreed to cut output by about 1.2 mbpd until March 2018 in an effort to reduce inventories and support prices.

Compliance with the deal has been high so far but Opec production hit a 2017 peak in July, in part on increased output from Libya and Nigeria, which were exempted from the pact due to production-sapping unrest.

"Opec-14 supply is expected to average 32.8 mbpd in August representing a decline of 419,000 bpd as compared to the 2017 high observed in July," Daniel Gerber, chief executive of PetroLogistics, said in an email.

"Opec crude oil exports fell by a whopping 750,000 bpd through the first half of August. An increase was observed in Latin American exports while decreases occurred in both the Middle East and Africa."

Geneva-based PetroLogistics is among a number of consultancies that estimate Opec supply by tracking tanker shipments.

Supply refers to a country’s crude exports plus its domestic use, rather than to production. PetroLogistics did not specify which countries were exporting less crude in August.

However, top exporter Saudi Arabia has said its exports would drop to 6.6 mbpd this month, almost 1 mbpd below levels a year ago. Tanker data suggests shipments from No. 2 exporter Iraq have also fallen this month.

Meanwhile, a tanker carrying liquefied petroleum gas (LPG) that had been anchored off Singapore for almost three weeks set sail for South Korea amid signs that demand for the fuel has increased.

The Very Large Gas Carrier Pacific Binzhou began moving toward Inchon, South Korea on August 18, ship data on Thomson Eikon showed, after prices flipped into backwardation around early last week from a contango structure.

A backwardated market, where prices for prompt delivery are higher than later-dated supplies, typically reflects that demand for a commodity has increased or supplies have declined.


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