Opec says oil deal bearing fruit, but US pumping more

FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub, appearing to run out of space to contain a historic supply glut that hammered prices, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford/File Photo

PARIS: World oil production fell in March thanks to a deal to cut output, Opec said Wednesday, but the cartel’s efforts to fight a global glut are threatened by American firms pumping oil with gusto.

The world produced a total of 95.82 million barrels per day (mb/d) last month, a fall of 230,000 barrels from February, the Organisation of the Petroleum Exporting Countries said in its monthly report.

The production by Opec itself, which accounts for about a third of the world’s output, fell by 153,000 barrels per day to 31.93 mb/d, according to secondary sources cited in the report.

This takes it below a target included in an output reduction deal by Opec and some non-Opec producers including Russia which came into force on Jan 1 for an initial run of six months.

The initiative has prompted a recovery in global oil prices, in turn attracting many American higher-cost producers back into the market as they can operate profitably again.

This means that the combined output of non-Opec producers, which fell to 57.32 mb/d last year, is now likely to recover to 57.89 mb/d this year, which would represent a rise of 580,000 barrels per day, Opec said.

Of the total rise, 540,000 barrels per day would be produced by the US, a higher level than previously predicted.

Reports have suggested that the cartel, prompted by kingpin Saudi Arabia, may extend the output cut deal by another six months when its members meet at the end of May.

The Wall Street Journal, citing people familiar with the matter, said Wednesday that Saudi Arabia has told its fellow Opec members that it wants the deal renewed.

Hopes for an extended period of cuts helped the oil price recover Wednesday, with US benchmark WTI up 0.4% on the day at US$53.62 and Brent 0.5% higher at US$56.51 in the early European afternoon.

Meanwhile, global demand for oil is likely to rise by 1.27 mb/d this year, a slight upward revision from Opec’s previous estimate, the cartel said in its report. - AFP