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Opec's biggest pump record oil with rally in jeopardy: IEA
[LONDON] Opec's biggest members are pumping record amounts of crude and this year's rally in prices is under threat, the International Energy Agency said.
Saudi Arabia, Iraq and the United Arab Emirates, accounting for at least 18 per cent of global oil output, each produced at a record last month, the IEA said. The 12-nation Organization of Petroleum Exporting Countries agreed on June 5 to leave its output quota unchanged, choosing to defend its market share rather than prices.
Oil's 45 per cent rally since mid-January was caused in part by some disruptions to supplies of oil products such as gasoline and diesel, according to the IEA. As refinery projects are completed, that should ease and curb the gains, the agency said.
"Product imbalances have likely been a key factor behind recent oil price strength, and that particular source of support might soon wane," the Paris-based adviser to 29 industrialised nations said in its monthly market report.
Brent crude, a benchmark for oil from the Middle East and West Africa, traded near US$65 a barrel on the ICE Futures Europe exchange in London at 7:30 am local time.
Saudi Arabia, Opec's biggest member and the world's largest crude exporter, raised production in May to 10.25 million barrels a day from 10.16 million in April. Iraq increased to 3.85 million a day from 3.75 million, and the U.A.E kept output at 2.87 million barrels a day. Global oil supply was about 96 million barrels.
The IEA's data for Saudi Arabia start in 1984. Opec's own data goes back further and that shows Saudi Arabia is pumping the most since August 1981.
The gains leave Opec's supply about 1.3 million barrels above its collective output target of 30 million barrels a day. The group reaffirmed this ceiling at a meeting on June 5 as it persists with a Saudi-led strategy to preserve global market share. Demand levels for Opec's crude will average about 30.2 million barrels a day in the second half, according to the IEA.
The IEA raised forecasts for non-Opec supply in 2015 by about 200,000 barrels a day following stronger-than-estimated output from the US. during the first quarter. Non-Opec production will expand by 1 million barrels a day to average 58 million a day this year, according to the report.
The agency boosted 2015 estimates for global oil demand by 320,000 barrels a day amid a global economic recovery, stimulus from lower prices and an especially cold winter. It projects that consumption will increase by 1.4 million barrels a day, or 1.5 per cent, this year to average 94 million barrels a day.