Nigeria's Minister for Petroleum Resources, Ibe Kachikwu says the country supports OPEC's efforts to stabilize oil prices, but wants to wait before deciding whether join the cartel's cuts in oil production. It seems that Russian Federation may oppose any attempts to deepen the oil production cuts as it may give the impression that OPEC and its partners in the deal are uncertain about its effectiveness in reducing global supplies. United States crude oil prices rose on July 12, 2017, due to the massive fall in nationwide crude oil inventories.
Not only has Libya's oil production rebounded, but it also appears that these gains are not temporary.
"For fellow OPEC members, who agreed to reduce production by 1.2 million bbl/d, to see their cut effectively diluted by almost two-thirds must be very frustrating, especially as their pact has, hitherto, been well observed by historical standards", the IEA said.
Producers "opened the taps" as Opec crude output rose by 340,000 barrels per day (bpd) in June to 32.6m bpd, the International Energy Agency (IEA) said in its monthly report. Production (the IEA's estimation) was lagging behind demand at 96.69 million bpd in May.
This comes as the agency, famous for underestimating demand, raised it and now predicts that global demand will increase by a historically strong 1.5% this year to 98 million barrels a day.
In its own monthly report on oil markets, OPEC on Wednesday said that the cartel's production rose by almost 400,000 barrels a day in June.
U.S. dollar closes higher on Taipei forex
Global stock markets were mixed on Tuesday as investors awaited Federal Reserve chair Janet Yellen's testimony to the U.S. The resulting surge in euro zone yields had also helped the benchmark Treasury yield climb to two-month highs on Friday.
The EIA report also showed that US oil production inched higher by 59,000 barrels a day to almost 9.4 million barrels a day. Goldman Sachs warned on Tuesday that crude oil could plunge below $40 a barrel "soon" if OPEC fails to take further action.
Anyway, no further oil output cuts are expected for the July meeting of the ministerial committee set up to monitor compliance with the OPEC-non-OPEC deal.
On the bullish side, the market is being supported by EIA remarks from earlier in the week calling for US crude oil production to rise by less than previously forecast next year due to a lower price outlook. If Libya and Nigeria do not experience any more disruptions due to violence or political instability, it is very likely that these countries will have no choice but to comply with the production cut. We expect to see gas demand continue to rise and exceed expectations.
However, market watchers should keep a careful eye on the numbers, because Libya and Nigeria may not actually be required to remove almost as much oil from the market as might be assumed.