Published: Fri, June 15, 2018
Markets | By Noel Gibbs

Saudi Oil Output Rises Above 10 Million Barrels a Day

Saudi Oil Output Rises Above 10 Million Barrels a Day

For now, global oil demand growth is expected at 1.61 millions of barrels per day (mb/d) in the second half of the year, with total oil demand projected to breach the 100 mb/d level.

Judging by auto sales, demand will continue to grow, with China's May sales of new automobiles standing at 2.29 million, up 9.6 percent from the same month past year, according to the China Association of Automobile Manufacturers (CAAM).

"The next two weeks are likely to see the oil market dominated mainly by OPEC's meeting in Vienna on June 22".

"We must not exaggerate the need of the oil market to pump more oil at the present time, which could cause great damage to global markets, and may also be interpreted in the wrong way by speculators and consumers, leading to a significant decline in oil prices", Luaibi said in a statement Monday.

OPEC and its allies have been curbing supply since January 2017 to boost oil prices and cut bloated global inventories.

Refining crude runs and rates hit their highest levels since late December as facilities came back online after periods of maintenance.

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He continued: "In this context, any geopolitical event can create a price spike".

Oil prices have faced one jolt already this year. The real reasons for the price rise are the collapse of the Venezuelan economy and Trump's decision to renege on the Iran nuclear deal.

Opec crude output in May slid for the fourth straight month to 31.90 mbd, the lowest in over a year.

Top exporter Saudi Arabia told OPEC that it raised oil output to slightly more than 10 million barrels per day (bpd) in May, a source familiar with the matter said, but still within its agreed target.

Oil LCOc1 pared an earlier decline after the report was released trading just above $76 a barrel.

Beyond changes in the supply-side, strong demand has been supportive of oil prices. Saudi Arabia now holds the bulk of the world's spare capacity.

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"Last week, we saw some news stories indicating that the Trump administration had asked OPEC to increase oil production".

Jason Gammel, an analyst at Jeffries, said: "If there are any further supply interruptions then there would be very little that the markets could do".

Al Mazrouei also acknowledged that U.S. shale producers have played a key role in the market amid the supply disruption in Venezuela.

Figures reported directly by OPEC members showed some bigger rises in production. It would be the first since 2016 when they began cutting production by a 1.8 million bpd.

The comments suggest that a good portion of the cartel is lining up against any move to increase production.

OPEC expects the rate of US production growth to double vs. 2017, with total output reaching 10.51 million bpd.

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But Saudi Arabia could even boost production beyond its stated output capacity of about 12.5 million bpd, possibly adding another 1 million bpd of what is known as surge capacity.

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