Friday, April 30, 2010

Opec oil output rises in April

Opec crude oil supply has risen in April, led by Nigeria and Saudi Arabia, a Reuters survey showed, as compliance with agreed output targets extended a year-long slide.

Supply from the 11 members of the Organization of the Petroleum Exporting Countries with output targets, all except Iraq, has averaged 26.88 million barrels per day (bpd), up from a revised 26.78 million bpd in March, according to the survey of oil firms, Opec officials and analysts.

The survey implies Opec is making 51 percent of supply cutbacks versus 54 percent in March. Oil prices have almost doubled since the start of 2009 to more than $85 a barrel, encouraging members to pump more crude.

'For the moment, I think as long as they're getting away with it at these current price levels, Opec are going to maximize production as much as they can without destabilizing the market,' said Helen Henton, head of commodities research at Standard Chartered in London.

Rising supply is unlikely to push prices lower, analysts said, given that outside factors such as a weak dollar and stronger equity markets have been major drivers of oil's gain, rather than rising demand.

'The oil price is being set on Wall Street not by the fundamentals, so the fact that Opec production is up further probably won't matter very much to the market,' said Paul Tossetti, senior energy adviser at PFC Energy.

Opec has left its output ceiling unchanged for more than a year since announcing a record supply curb of 4.2 million bpd in December 2008 to combat lower demand and prices, which were both hit by the economic crisis.

Supply from the Opec-11 is 2.04 million bpd higher in April than their target of 24.84 million bpd, the survey found, meaning the group lowered output by 2.16 million bpd of the promised curbs. Compliance peaked at 81 percent in April and March 2009 according to Reuters estimates.

With a day left of April, the final figures for the month may change.

Including Iraq, total Opec supply has risen 60,000 bpd to 29.16 million bpd, the survey found. That was within sight of February's total of 29.21 million bpd, which was the highest since December 2008.

Nigeria contributed the most to the supply increase in April as exports climbed and oil use at domestic refineries increased.

Exports rose to 2.05 million bpd, despite disruption to shipments of Brass River crude at the end of April, according to loading schedules and sources at oil companies that produce Nigeria's oil.

Saudi Arabia, Opec's top producer, nudged supply up to 8.25 million bpd, the survey found, reflecting increased crude oil use in power plants. One source estimated the increase in Saudi supply at 100,000 bpd.

Iran's output slipped by 50,000 bpd, the survey found. The country has been storing increasing amounts of crude on tankers at sea because of weak demand, shipping industry sources say. - Reuters

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