July’s record pumping shows how Saudi Arabia continues to compete for its share of the export market with rivals including the US, Russia and a resurgent Iran, which has been boosting production after the end of Western sanctions earlier this year.
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OPEC will hold informal talks at a conference in Algiers next month, as members constantly discuss ways to stabilize the market, Mohammed Al Sada, Qatar’s energy minister and holder of OPEC’s rotating presidency, said August 8.
Oil prices fell around 2 percent on Wednesday after the second-biggest weekly draw in US gasoline this summer was countered by an unseasonal build in crude stockpiles.
Since crude oil refiners could only respond to the problem of reduced oil demands by cutting output, industry experts predict that the trend will be reversed with the approach of winter in the Northern Hemisphere as the year comes to an end.
Saudi Arabia typically pumps more oil in the summer to meet higher domestic energy demand from air conditioning.
Traders said excess supplies of crude and refined fuel products were weighing on markets, while a proposed meeting by oil producers was unlikely to result in significant market tightening. So far, the big producers have been unwilling to limit production.
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Moreover, without the full backing of Saudi Arabia and its closest allies, the deal would never come to fruition, said Tim Evans, a Citi Futures analyst.
“Oil eased lower as another round of proposed production freeze talks by Opec failed to excite investors”, ANZ Bank said.
Still, he said, any cooperation between the two would nearly certainly be temporary.
The EIA says oil production is expected to begin rising in late 2017 due in part to higher forecast oil prices and improvements in drilling productivity. The organization has 14 members after adding Gabon in June. It expects 1.4mn bpd of demand growth this year and next, while seeing production dropping off from China by 180,000 bpd this year, and an additional 80,000 bpd next year – encouraged by a lack of investment.
A monthly report from the Organisation of Petroleum Exporting Countries showed Saudi Arabian oil production at almost 10.5 million barrels per day in July.
For the week ending August 5, USA crude inventories grew by 1.1 million barrels.
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The agency also predict U.S. crude oil output to reach 8.31 million bpd next year, up from its forecast of 8.2 million bpd in July.
