OPEC’s largest producer hit a 12-year production record last month
Saudi Arabia increased oil production to 10.3 MMBOPD in March, setting a 12-year high for production in the country. Saudi Oil Minister Ali al-Naimi said the Kingdom will continue producing around 10 MMBOPD at a conference in Riyadh, reports Bloomberg. The March output is the highest since at least 2002, when the Joint Organizations Data Initiative began compiling output statistics.
Both Brent and West Texas Intermediate (WTI) were trading lower today on the news of increased production from Saudi Arabia. The May contract for Brent was down 3.45%, trading at $57.06, while May futures contracts for WTI were down 4.56% at $51.52 as of 12:13 p.m. EST.
Despite the dip in prices, al-Naimi said he expects prices will come back soon. “Prices will improve in the near future,” he said. “The challenge is to restore the supply-demand balance and reach price stability. This requires the cooperation of non-OPEC major producers, just as it did in the 1998-99 crises.”
Adding to the global glut
The United States and Russia, the world’s first and second largest producers, continue to exploit their resources at a torrid pace. The U.S. produced more than any other nation for a third straight year and Russia reached a new post-Soviet record in March as well.
U.S. crude stocks rose an addition 10.9 MMBO to 482.4 MMBO for the week ended April 3, marking the 13th consecutive week of record builds and sending bearish signals to the market. “We’re going to need to see a very big uptick in demand to offset that supply,” said Ben Le Brun, analyst at OptionsXpress in Sydney.
The renewed pressure on oil prices came after a short price rally earlier this week. News that Iranian oil would likely not flood the market, on top of a weaker dollar and fewer rigs in the U.S. led to a temporary rally in both WTI and Brent prices.
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