Opec output drops as Saudi and Iraq supplies dip
Opec oil output fell in October from the previous month as declines in production by Saudi Arabia and Iraq outweighed higher supply from African members, according to a survey by Reuters.
The drops are not indicative of deliberate supply cuts to prop up prices, and Opec is still pumping close to a record high as major producers focus on defending market share.
Opec supply fell in October to 31.64m barrels per day (bpd) from a revised 31.76m in September, according to the survey, which was based on shipping data and information from oil companies, Opec and consultants.
Opec has boosted production by almost 1.5m bpd since its November 2014 switch to defending market share. Despite the decline in October, output is not far below July's 31.88m bpd, the highest since Reuters' records began in 1997.
The Opec increase has added to ample supplies, which have helped cut prices by more than half from June 2014 to below $50 a barrel. Still, with reductions in capital spending by oil companies expected to curb future supply, analysts feel Opec's strategy will deliver.
"Clearly, Opec's long-game strategy is working," said Harry Tchilinguirian, global head of commodity strategy at BNP Paribas. "In the end, Opec's strategy is creating the conditions for higher prices for longer in a couple of years time."
The biggest supply drop in October has come from Saudi Arabia, which trimmed output due to reduced use of crude in domestic power plants and refineries, sources in the survey said, despite higher exports. Saudi output, at 10.10m bpd, remains not far below the record high of 10.56m bpd it pumped in June.