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For The First Time Since March, OPEC Oil Production Falls

For The First Time Since March, OPEC Oil Production Falls
With several key exporters in the group throttled back production, OPEC's oil output fell in August for the first time since March according to a monthly tally released Tuesday.
According to independent sources that monitor OPEC's production the 14-member cartel pumped 32.76 million barrels a day last month. That marks a drop of 79,100 barrel-a-day from July.
In order to keep 1.8 million barrels a day of oil production off the market, OPEC has partnered with other producers, including Russia. The exporters are trying drive to down global stockpiles of crude and to drain oversupply from the market.
With Saudi Arabia holding discussions about extending the deal beyond March, oil prices got support this week. OPEC said 195 million barrels above the five-year average in July was the crude oil stockpiles in the OECD, a group of mostly developed nations.
Reduction of those stockpiles is harder because of rising production in two OPEC member countries, Libya and Nigeria. But because their output had already tanked due to domestic conflicts, OPEC exempted the two nations from cutting production. But output was restored more quickly than expected by both the nations.
With daily production falling by about 112,000 barrels, to 890,000 barrels a day, the trend reversed last month in Libya. Sporadic disruptions due to protests is being seen at Libya's Sharara oil field, the nation's largest.
And by jumping by 138,000 barrels, reaching 1.86 million barrels a day, Nigeria's daily output more than offset that drop.
And dipping slightly to just above 10 million barrels a day, production from top exporter Saudi Arabia also saw a drop. In recent months, Saudi output was trending higher. Compensating for other OPEC members that were not hitting their quotas was the deep production cut by the kingdom early in the year.
While still pumping above levels they agreed to last winter, two of those nations, Iraq and the United Arab Emirates, cut production in August. Production in Venezuela, which is in the grip of a full-blown economic crisis, also continued to fall.
Its outlook for global oil demand in 2017 and 2018 was slightly raised by OPEC. Consumption of 96.77 million barrels a day this year and 98.12 million barrels a day next year would happen throughout the world, the cartel now believes.
Better-than-expected economic growth is partly responsible for this revision. From 3.4 percent to 3.5 percent, forecast of the world economic growth in 2017was also revised by OPEC.
"Global economic growth momentum has gained traction lately and has become more balanced, with all major economies now showing positive growth this year, a trend that is forecast to continue into 2018," OPEC said.
Saying the reconstruction effort along the Gulf Coast will offset the loss in economic activity from the devastating storm, OPEC does not expect Hurricane Harvey to impact U.S. economic growth much.

Christopher J. Mitchell

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