Nigerian actions confirm it will not cap its oil output

OPEC has released this month’s Monthly Oil Market Report, outlining the cartel’s assessment of the state of the international oil industry.

The cartel increased production in December, partially reversing the significant decline seen last month. Total OPEC production grew by 42.4 MBOPD in December, compared to a drop of 116 MBOPD in November.

3 OPEC members deliver large production increases

Three countries saw large increases in oil output, Algeria, Angola and Nigeria, which added a combined 150.8 MBOPD. The rise in Angolan production is unsurprising, as it saw a significant drop in production in November. While 44.8 MBOPD added by the African nation is relatively large, it is not enough to reverse the 101 MBOPD drop seen last month. Nigerian production continues to rise, defying previous assumptions that it would cap production at 1.6 MMBOPD. The country added 75.7 MBOPD in December for a total of 1,861 MBOPD.

Venezuelan production continues to fall

Only one country saw output decrease significantly in December—financially and politically stressed Venezuela.

According to OPEC secondary sources, Venezuelan crude production fell by 82.2 MBOPD in December, nearly double last month’s decline. Venezuelan oil production has been gradually declining for the past six years, but the slide is accelerating. Oil output is down 289 MBOPD year-over-year, representing a decline of over 14% in a single year. According to Bloomberg, the country’s production is at the lowest level since 1989, not counting the brief, but severe, strike by PDVSA employees in late 2002-early 2003.

OPEC Cut Compliance Rises to 118% on Venezuelan Production Decline

Source: EnerCom Analytics

New record: 118% cut compliance – Bloomberg

Overall, OPEC members subject to the production cut increased compliance in December, entirely due to the drop in Venezuelan production. Combined production from this group fell by 39.6 MBOPD, further boosting compliance. According to Bloomberg cut compliance rose to 118% this month, a new record.

Total yearly production down 250 MBOPD

Data is now available for all of 2017, demonstrating the overall effects of the production cuts. OPEC produced 250 MBOPD less in 2017 than in 2016. However, this number is skewed by Libya, Iran and Nigeria, which are all not subject to the cut. These three countries added a combined 830 MBOPD, meaning cut-compliant OPEC members decreased production by 1,080 MBOPD. Only one nation subject to the cuts increased yearly production, Iraq. This is unsurprising, as Iraq has demonstrated the lowest compliance among major OPEC producers.

OPEC Cut Compliance Rises to 118% on Venezuelan Production Decline

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