The world oil glut is shrinking according to Opec, following a sharp decline in its members’ output last month.
The 13-member oil producers’ group reported that its output as a whole fell by 175,000 barrels per day in February to 32.38 million bpd.
The UAE’s production was a big contributor to that decline as some oilfields went into maintenance, although Iraq’s lower output was the main factor.
As is often the case, there was a large discrepancy between officially reported Opec figures and those estimated by “secondary sources”, the average of guesses made by industry sources polled by newswires.
The official Opec numbers show a decline of Opec output of a whopping 492,000 bpd last month, although the 175,000 bpd market sources estimate is generally thought likely to be more accurate.
The UAE reported that its production fell by 353,000 bpd to just below 2.8 million bpd; the market guess was that it fell more like 49,000 bpd.
The other big fall in production was in Iraq, which said production fell 317,000 bpd (market guess 263,000 bpd), while the increase in output by Iran in February was less than its officials had trumpeted after the official lifting of nuclear-related sanctions at around 200,000 bpd.
In any case, rising oil prices in the market support the idea that lower supply from Opec, and especially the outlook for continued fall-off in production outside the group, was having the desired effect of bringing the market back into balance.
Opec noted the rise in oil futures prices since the beginning of the year, which lifted Opec’s reference basket (Orb) of crude oil prices by more than 8 per cent last month. The price of Orb has risen nearly 60 per cent since its lowest level in late January to yesterday’s price of US$35.62 per barrel, although that still is more than 40 per cent below the price at the same time last year.
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