OPEC Crude Production Slipped in February on Saudi, Venezuelan Reductions

In its Monthly Oil Market Report for March, released Thursday morning, the Organization of the Petroleum Exporting Countries (OPEC) noted that the cartel’s month-over-month average price for its reference basket rose by $5.09 (up 3%) to $63.83 a barrel in the month of February. Year to date, OPEC’s reference basket price is up $6.89 (12.1%) per barrel.

The cartel said OPEC production in February, as reported by secondary sources, dipped month over month by 221,000 barrels a day to a daily average of 30.55 million barrels, about 1 million barrels a day less than December 2018 production of 31.58 million barrels. Saudi Arabia’s February production fell to 10.09 million barrels a day, a month-over-month decrease of 86,000 barrels a day. Iranian production increased by 12,000 barrels a day to around 2.74 million barrels, and Venezuelan production dropped by 142,000 barrels a day to about 1.01 million barrels.

The Saudis themselves reported total production of 10.14 million barrels a day in February, down by about 106,000 barrels a day compared to January. Venezuela reported a decline of 56,000 barrels to a total of 1.43 million barrels a day.

Russian production averaged a record 11.35 million barrels a day in 2018, and February production rose to 11.53 million barrels. OPEC is estimating average daily Russian production in 2019 will reach a new record of 11.49 million barrels a day.

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OPEC now forecasts average 2019 global demand of 99.96 million barrels a day, basically unchanged from the previous month’s estimate. The current estimate for 2019 global demand growth is 1.24 million barrels a day, also unchanged from last month’s estimate.

The cartel estimated 2018 non-OPEC supply rose by 30,000 barrels a day to 62.19 million barrels. For 2019 non-OPEC supply is expected to increase by 2.24 million barrels a day to an average of 64.43 million barrels, an increase of 60,000 barrels a day compared with last month’s estimate for the current year.

U.S. production in 2019 is now expected to rise to 18.45 million barrels a day, up by 10,000 barrels from last month’s forecast. That reflects a U.S. supply growth rate of 1.8 million barrels a day (up 10.8%) year over year.

2018’s estimated demand for OPEC crude was lowered to 31.5 million barrels a day, down by some 100,000 barrels a day compared to last month’s estimate. Demand in 2019 is now estimated at 30.5 million barrels a day, down by around 1.1 million barrels from the 2018 level.

Crude prices continue to trend higher Thursday morning, with West Texas Intermediate for April delivery up about 0.6% at $58.61 a barrel and Brent for May delivery up about 0.3% at $67.88.

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