Last month, OPEC reported a spike in its oil production to the highest level in eight years and advanced its forecast for 2017 non-OPEC supply growth, directing to a larger supply glut next year despite the group’s deal to limit output. The Organization of the Petroleum Exporting Countries ramped out 33.39 million barrels per day (bpd) last month, according to figures OPEC collects from secondary sources, gained 220,000 bpd from August, OPEC reported in a monthly report on Wednesday.
The figures emphasize OPEC’s challenge in looking to control supplies for the first time since 2008 to curb a persistent surplus and ramp up prices. Oil is trading near $53 a barrel LCOc1, less than half the price hit in mid-2014.
“Inventories stand near all-time highs worldwide,” OPEC stated in the report. “Although in recent weeks these high levels have been slightly drawn down.”
To speed up a re-stabilizing of the market, OPEC agreed at a meeting in Algeria on Sept. 28 to limit supply to between 32.50 million bpd and 33.0 million bpd. The group hopes to finalize the details, including how much each of the its 14 members can pump, at a meeting in November. The report displayed the supply increase in September mostly came from Libya and Nigeria, which are reestablishing output after disruptions, and from Iraq, which has questioned the precision of OPEC’s secondary-source figures.
OPEC uses two sets of numbers to measure its output: figures provided by each country, and secondary sources which include industry media. The reason why two sets of figures are used is because of past conflicts over the amount countries were really pumping. Iraq reported to the OPEC it produced 4.775 million bpd last month, while the secondary sources put output at 4.455 million bpd. From Iraq’s perspective, joining the OPEC supply cut deal from the higher figure would be more beneficial.
In the report, OPEC also increased its projections of non-OPEC supply next year, saying output from outside the group would increase by 240,000 bpd, up 40,000 bpd from earlier projections due to a higher forecast for Russia. With demand for OPEC crude in 2017 anticipated to average 32.59 million bpd, the report indicates there will now be an median supply glut of 800,000 bpd if OPEC keeps output gradual. September report pointed to a 760,000 bpd surplus. OPEC made no revision to the global oil demand forecast, projecting demand growth of 1.15 million bpd next year.