A monthly report by the Organisation of Oil Producing and Exporting Countries has revealed that the rebound in output from Nigeria and Libya has been responsible for the group’s progress, though slow, towards achieving equilibrium in the oil market.
The 11-member cartel said on Tuesday its output rose by 336,000 barrels per day (bpd) in May to 32.14 million bpd following export from the two countries exempted from the production cut.
Nigeria and Libya got the consideration because unrest had curbed their output.
Whole this does not help in reducing the oil glur OPEC set out to tackle, the chances problem might erupt again in the two countries, thus slowing output are high.
Then OPEC believes its plan will materialise.
According to Reuters, OPEC said oil inventories in industrialized countries dropped in April and would fall further in the rest of the year, but a recovery in U.S. production was slowing efforts to get rid of excess supply.
“The rebalancing of the market is under way, but at a slower pace, given the changes in fundamentals since December, especially the shift in U.S. supply from an expected contraction to positive growth,” the report stated.
Oil prices gave up gains on Tuesday after the release of the report to trade toward $48 a barrel (LCOc1), below the $60 level that top OPEC producer Saudi Arabia would like to see and less than half the level of mid-2014.
OPEC has decided to cut its output by about 1.2 million bpd while Russia and other non-OPEC producers are cutting half as much. And the two major producers agreed in May to prolong the accord until March 2018.
In the report, OPEC pointed to continued high compliance by its members with the supply deal and said oil stocks in industrialized nations fell in April – although they are still 251 million barrels above the five-year average.
Supply from OPEC’s members with production targets under the accord, excluding Libya and Nigeria, averaged 29.729 million bpd in May.