The Organisation of Petroleum Exporting Countries (OPEC) on Tuesday said it would achieve the re-balancing of the crude oil market at a â€œslower pace,â€ stressing that even its own output in May jumped as a result of increased production by Nigeria, and Libya, which were exempted by the agreement to reduce production.
In its Monthly Oil Market Report (MOMR) for May, OPEC said its output rose by 336,000 barrels per day (bpd) in May to 32.14 million bpd as a result of increased production by Nigeria and Libya.
â€œDemand for OPEC crude in 2017 was revised up by 100,000 bpd from the previous month. This upward adjustment was mainly due to the downward revision in non-OPEC supply as world oil demand remained unchanged. Within the quarters, the first quarter remained unchanged, while the second quarter was revised down by 100,000 bpd. Both the third and the fourth quarters were each revised up by 200,000 bpd. Demand for OPEC crude this year is projected to increase by 300,000 bpd to average 32m bpd. Compared to the same quarters of last year, the first quarter is expected to increase by 100,000 bpd, while all other quarters are estimated to remain unchanged,â€ OPEC said in the report.
The OPEC production figures were for 13 members and did not include Equatorial Guinea, which joined last month.
OPEC added that crude oil inventories in industrialised countries dropped in April and would fall further in the rest of the year, but a recovery in United States production was slowing efforts to get rid of excess supply.
â€œThe rebalancing of the market is under way, but at a slower pace, given the changes in fundamentals since December, especially the shift in US supply from an expected contraction to positive growth,â€ OPEC added.
OPEC noted the continued high compliance by its members with the supply deal, adding that inventories in industrialised countries dropped in April, even though they were still 251 million barrels above the five-year average.
Saudi Arabia reported to OPEC that it reduced output further by about 66,000 bpd in May to 9.88 million bpd.
The cartel reduced its estimate of oil supply growth from producers outside the group this year to 840,000 bpd from 950,000 bpd, following the decision to extend the cut by nine months.
The group also cut its forecast for growth in the United States, where shale producers have gained impetus from the higher prices brought about by the cut.
According to the MOMR, US output is still expected to rise by 800,000 bpd in 2017, contributing almost all the increased output by the non-OPEC members.
OPEC raised the forecast demand for its crude this year by 100,000 bpd to 32.02 million bpd, below its May output.
The Secretary General of the cartel, Mr. Mohammad Barkindo had said it was too early for Nigeria, Libyaâ€™s output to be capped.
OPEC is curbing output by about 1.2 million bpd, while Russia and other non-OPEC producers are cutting 600,000 bpd under an accord that was extended until March 2018.