OPEC oil production falls for the first time since March

Casey Dawson
September 13, 2017

The possibility of an extension to the 15-month production pact between members of the Organization of the Petroleum Exporting Countries and non-OPEC producers also helped to support prices, traders said.

"I think that we are going to have an average oil price of as much as $40 to $43 next year and we are preparing for that", Sechin said.

US crude for October delivery was up 41 cents, or 0.9 percent, at $47.89 a barrel by 0648 GMT, having tumbled 3.3 percent on Friday. But the oil cartel has struggled to raise oil prices amid an oil production boom in the U.S.

The initial OPEC-non-OPEC agreement pushed Brent prices up to nearly US$57 a barrel and WTI to over US$54 a barrel in January this year, but since then, the benchmarks have been sliding down, with a few notable interruptions of the trend thanks to supply disruptions and the May decision to extend the cuts beyond the original deadline of June 30, 2017.

Hurricane Irma, which has been moving inland over the southeastern parts of the U.S., has affected at least nine states so far, among them Florida, Georgia, Alabama and SC, causing storm surges and flooding and cutting off power supplies. However, the latest oil market report from OPEC showed that production increased by 173,000 barrels per day in July, after rising by 396,000 barrels in June and by 366,000 barrels per day in May, thanks largely to two exempted countries, Libya and Nigeria. The new agreement extends the production deal for nine months until March 2018.

Crude prices are down 8.6% in the past year.

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Though the largest U.S. refinery, Motiva Port Arthur, and a number of others were resuming operations more than two weeks after Hurricane Harvey steamrolled through the U.S. Gulf coast, the impact from Irma was less supportive of oil prices.

Analysts surveyed Monday by S&P Global Platts expect United States crude stocks rose 10.1 million barrels. "A similar production level is also anticipated for September", the Saudi ministry said.

OPEC and a number of other producers including Russian Federation agreed in May to extend production cuts, originally agreed previous year, into 2018 to ease a global supply glut and support the price of crude.

The API is due to release its data for last week at 4:30 p.m. EDT (2030 GMT) on Tuesday and the EIA report is scheduled at 10:30 a.m. EDT on Wednesday.

Recently OPEC said it was open to extending its effort to reduce the global petroleum glut by withholding supplies beyond March of next year.

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