Oil hits 18-month high after Opec members' output drops
OPEC's oil output in December fell from a record high ahead of a deal to cut production, a Reuters survey found yesterday, helped by attacks on Nigeria's oil industry and top exporter Saudi Arabia trimming exports.
The decline, the first since May according to Reuters surveys, occurred despite higher exports from second-largest Opec producer Iraq and a further upward trend in Libyan output.
Supply from Opec in December fell to 34.18 million barrels per day (bpd) from a revised 34.38 million bpd in November, according to the survey based on shipping data and information from industry sources.
Oil hit an 18-month high of $58.37 a barrel on Tuesday, boosted by an Opec agreement to lower supply from January 1.
The supportive impact of the agreement on prices may not occur straight away, an analyst at SEB said.
"We are not necessarily set for an immediate price take-off. One problem is the very high Opec production in fourth-quarter 2016," Bjarne Schieldrop, chief commodities analyst at SEB, said. "The still-rising crude oil production in Libya is also creating concerns that Opec's cuts might be less effective."
Based on the December survey, Opec is pumping 1.68 million bpd above the 32.50 million bpd production target that it agreed on November 30 to adopt from January 1 in its first supply cut decision in eight years.
Opec output started to climb following its decision in late 2014 to retain market share rather than cut supply to prop up prices. Saudi Arabia, Iraq and Iran all pumped more and production also increased due to the return of Indonesia in 2015 and Gabon in July 2016 as Opec members. (Reuters)