OPEC oil output near 2 1/2-year high as Saudis show no letup

OPEC oil production was little changed in April near the highest level since November 2012, as Saudi Arabia pumped 10 million barrels a day.

Production by the Organization of Petroleum Exporting Countries slipped 1,000 barrels to 31.295 million a day this month, according to a Bloomberg survey of oil companies, producers and analysts. Last month’s total was revised 267,000 barrels higher to 31.296 million a day, mostly because of a change to the Saudi estimate.

Prices tumbled the first quarter of this year as U.S. output surged to the highest level in more than four decades and OPEC members pumped more barrels. The 12-member group left its production quota unchanged at a November meeting, prompting speculation that it would let crude slide low enough to curb shale development in the U.S.

“The high Saudi number is what sticks out,” Julius Walker, a strategist at JBC Energy GmbH in Vienna said by phone. “The consensus view is that the Saudis are going to continue with their present policy. The market continues to be substantially oversupplied.”

Brent for June settlement rose 76 cents, or 1.2 percent, to $66.60 a barrel on the London-based ICE Futures Europe exchange at 12:34 p.m. New York time. Brent, the benchmark for more than half the world’s oil, touched $66.72 on Wednesday, the highest since Dec. 9. The contract slipped to $45.19 on Jan. 13, the lowest since March 2009.
Trimmed Output

Saudi Arabia, OPEC’s top producer, trimmed output by 100,000 barrels a day to 10 million this month. March output was revised 330,000 barrels a day higher to 10.1 million. The country sold oil at a higher-than-projected rate in March as a result of the biggest discounts in at least 15 years.

The oil market is in “excellent” condition, Prince Abdulaziz bin Salman, Saudi Arabia’s deputy oil minister, said Monday. Oil Minister Ali al-Naimi stressed earlier this month that the kingdom won’t yield market share to higher-cost producers.

“The Saudis are pumping aggressively because they need to because of the price drop, for political expediency and to take out the frackers at the knees,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone.

The shale oil boom sent U.S. crude output to 9.422 million barrels a day in the week ended March 20, the highest level in more than four decades, Energy Information Administration data show. The rise has been driven by a combination of horizontal drilling and hydraulic fracturing. U.S. drillers have idled 56 percent of oil rigs since October, leaving the total at 703 on April 24, according to Baker Hughes Inc.
Angolan Fields

Angolan production fell by 160,000 barrels a day to 1.68 million, the biggest decline in April. BP Plc declared force majeure on exports from the 150,000 barrel-a-day Plutonio field for 10 days starting April 14. Force majeure is a legal step that protects them from liability when they can’t fulfill a contract for reasons beyond their control. Eni SpA shut the 100,000 barrel a day Sangos field last month for maintenance.

Iraqi production slipped 94,000 barrels a day to 3.656 million this month, according to the survey. Iraq is OPEC’s second-biggest producer.

Nigeria’s output climbed 80,000 barrels a day to 1.98 million in April, the first gain this year. Muhammadu Buhari unseated President Goodluck Jonathan in a March 28-29 election, the first lawful transition of power since British colonial rule ended in 1960.

Libyan output rose 40,000 barrels a day to 520,000 this month, the highest level since November. The country’s current output is about a third of what it was before the 2011 rebellion that ended Muammar Qaddafi’s 42-year rule.
Vulnerable Market

“There’s no sign OPEC is starting to reduce output even though there’s an excess of supply, so the market is vulnerable,” Kilduff said.

OPEC ministers are scheduled to convene June 5 in Vienna. Technical experts from Russia, Mexico and Oman will confer with their OPEC counterparts on May 12 to May 13, according to two people with direct knowledge of the matter who asked not to be identified because the talks are private.

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