LONDON: Opec, excluding Iraq and Angola, is set to trim oil output in April due to lower sales from Iran, which sold more than previously thought in March, a consultant said yesterday.
Opec’s 10 members subject to output limits are expected to pump 26.9mn barrels per day, down from an upwardly revised 27.05mn bpd in March, said Conrad Gerber of Petrologistics, which tracks tanker shipments.
The estimate indicates Opec’s adherence to agreed supply curbs began to wane in March as global oil prices rallied. Crude oil in New York is trading at around $62 a barrel, after a dip below $50 in January.
“This is always the danger once the market firms,” Gerber said. “They can’t resist selling extra barrels into a strong market. There’s not much of a reduction in April.”
Iran, Opec’s second-largest producer, is set to trim supply to 3.9mn bpd in April from 4.15mn bpd in March, when it boosted sales from storage, Gerber said.
He estimates that Iran sold about 5.5mn barrels from storage in March, lifting exports to 2.8mn bpd.
Despite the expected supply drop in April, the estimate indicates output is still higher than Opec’s target of 25.8mn bpd for the 10 countries that took effect on February 1.
Even so, output is lower than when Opec started cutting output in November to prop up prices. Opec said the 10 members were pumping 27.5mn bpd before the supply curbs began.
Figures yesterday from another analyst, who estimates future exports by 11 of the 12 Opec countries, indicated that the group is still keeping a lid on output.
Roy Mason of consultancy Oil Movements said Opec seaborne exports excluding Angola on a four-week average will slip to 24.11mn bpd in the four weeks to May 5 versus 24.2mn bpd to April 7.
Opec, source of more than a third of the world’s oil, agreed supply curbs of 1.7mn bpd, or about 6%, last year in two steps. The second stage took effect from February 1.
Mason said the measures had taken between 900,000 bpd and 1mn bpd off the market, suggesting that adherence to the total reduction promised was improving.
“From an Opec perspective, it is a good thing, good news, because compliance is up rather than down - it’s improving,” Mason said.
According to Petrologistics, top world exporter Saudi Arabia, which has met most of its pledged supply reduction, is keeping output little changed in April at 8.64mn bpd.
Including Iraq and Angola, production by the 12-member Organisation of the Petroleum Exporting Countries is expected to fall to 30.5mn bpd from 30.7mn bpd in March, Gerber said.
Opec decided to maintain current supplies at a meeting in March and is next scheduled to gather in September to decide production policy.
Yesterday, in New York, oil prices dipped as rising refinery production and a key pipeline restart eased worries of a US fuel supply crunch this summer driving season.
Losses were limited, however, by new concerns over Iran’s nuclear ambitions after a document from the UN nuclear watchdog said on Wednesday that the key oil producer had begun making nuclear fuel underground.
US crude oil futures for May delivery dropped $1.38 to $61.75 a barrel, pressured by selling ahead of the contract’s expiry on Friday.
London Brent crude, currently seen as a better guide to world oil prices than US crude, was down 10 cents at $65.94 a barrel.
Enbridge on Wednesday restarted a portion of a major pipeline carrying Canadian oil to the US Midwest that had been shut after a leak on April 15.
The bearish news followed a US government report showing refineries boosted utilisation rates by 2 percentage points last week - a sign fuel supplies will rise leading into peak summer driving demand.
Also weighing on oil prices were signs Nigeria would restart oil fields shut for more than a year by militant attacks.
Traders said on Thursday four cargoes were due to load from the Forcados fields in June. – Reuters