OPEC Won't Prevent Nigeria, Libya From Increasing Oil Output

Brent for September settlement was 45 cents higher at $48.51 a barrel on the London-based ICE Futures Europe exchange. The group is likely to become less compliant with its cuts toward the end of this year, with the risk of a domino effect after some members suggested they won't adhere to their targets, according to JPMorgan Chase & Co.

In May, OPEC and some non-OPEC producers, such as Russian Federation, extended an agreement to slash 1.8 million barrels per day in supply until March 2018. The increased production in the US and an increase in the numbers of operating rigs remain as one of the biggest of concerns for the oil bulls. The kingdom exported an average of 7.2 million barrels a day from January to May, he said, so the new action would theoretically remove an additional 600,000 barrels a day from the market.

A promise from OPEC to cut production lifted oil prices to $50 last week, but few in the ene...

Oil futures have given up all the gains posted in advance of last week's agreement between OPEC and non-OPEC producers to extend a production cut for a further nine months.

These inflationary measures saw September contracts for both WTI and Brent up on 1.3% and 1.1% on the day, respectively.

Crude oil prices gained ground early Monday on the back of optimism over market balance, but concerns about slow economic growth could undermine performance.

The kingdom tried to manipulate prices by slashing output to increase demand, but the plan backfired as U.S. shale producers continued to pump more oil.

For example, OPEC's production fell by 920,000 barrels a day from October to June, according to the International Energy Agency.

Global oil producers, meeting in Russia Monday, called for stricter adherence to their agreement to cut output, with the inclusion of top African producer Nigeria.

Meanwhile, OPEC Secretary General Mohammad Barkindo said on Sunday that a rebalancing of the oil market is progressing more slowly than expected, but will speed up in the second half of 2017.

Nigeria had been exempt from an agreement to trim output by 1.8 million barrels a day.

The JMMC also said Nigeria would join the deal by capping or even cutting its output as well although the exemption for Libya would continue.

  • Joey Payne