OPEC Reports Higher Output and Higher Prices for July

In its Monthly Oil Market Report for August, released Wednesday morning, the Organization of the Petroleum Exporting Countries (OPEC) noted that the cartel’s price for its reference basket rose to $46.93 a barrel (up 3.8%) in July. For the year to date, OPEC’s basket price has averaged $49.75 a barrel, a sharp increase over last year’s average of $37.20 for the same period.

The less-good news, from the cartel’s point of view, is that production rose for the third consecutive month to 32.87 million barrels a day. Libyan production increased by 154,300 barrels a day in July, accounting for 89% of OPEC production growth.

OPEC’s estimate of global demand growth for 2017 rose by 100,000 barrels a day to 1.37 million barrels a day, a daily average of 96.49 million barrels. The cartel’s projected demand growth for 2018 is now 1.28 million barrels a day for an average 97.77 million barrels a day.

The cartel lowered its estimate of non-OPEC production for 2017, forecasting non-OPEC supply to decrease by 28,000 barrels a day and average 57.77 million barrels a day for the year. For 2018, non-OPEC supply is expected to grow by 1.1 million barrels a day to an average of 58.87 million barrels, 42,000 barrels a day below the July projection.

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2017’s estimated demand for OPEC crude rose by 400,000 barrels a day compared to 2016 demand to 32.4 million barrels a day. Demand in 2018 is now estimated at 32.4 million barrels a day.

The cartel said OPEC production in July, as reported by secondary sources, rose by 173,000 barrels a day to a daily average of 32.87 million barrels. Saudi Arabia’s June production rose to 10.07 million barrels a day, a month-over-month increase of nearly 32,000 barrels a day. Under the production cuts initiated in January, Saudi Arabia’s quota is 10.058 million barrels a day.

Crude prices were rising Thursday morning, with West Texas Intermediate crude for September delivery trading up 1.2% at $50.19. Brent crude for October delivery traded up 1% at $53.55.

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