NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures opened lower Monday ahead of a technical meeting by members and nonmembers of the Organization of the Petroleum Exporting Countries to plug leaks on their agreement to cut production by 1.8 million barrels per day through March 2018.
The meeting by some of the producers that include Saudi Arabia and Russia is taking place Monday and Tuesday in Abu Dhabi will discuss how to improve compliance with their 15-month production agreement that started on January 1 and is set to expire in March 2018. Two recent surveys showed OPEC production rose to a 2017 high of 33 million bpd in July as compliance slackened.
The OPEC production cuts so far haven't meaningfully drawn down global inventories in part because of rising production by cartel members Libya and Nigeria plus surging production in the United States. Libya, exempt from the production agreement, increased its output in July by 180,000 bpd to 1.025 million bpd, recent surveys showed, but its Sharara oilfield that has been producing 270,000 bpd is reportedly shutting down gradually. Nigeria raised its output by 40,000 bpd in July after producing 1.73 million bpd in June, reports said. Nigeria joined the OPEC quota scheme about two weeks ago by agreeing to cap its output at 1.8 million bpd.
This morning, oil services firm Baker Hughes, Inc. said the number of active oil rigs globally rose 69 for to 2,110 in July, 629 higher year-on-year. U.S. rig count for July was 953, up 22 from the prior month, and was 504 higher year-on-year. Last week, U.S. rig count fell by one to 765, up 240 year-to-date.
U.S. crude oil production at a 9.43 million bpd two-year high during the week-ended July 28 was up 970,000 bpd versus a year ago, Energy Information Administration reported last week. However, domestic crude inventories were drawn down to a 481.9 million bbl seven-month low, EIA added.
In early trade, September West Texas Intermediate crude futures fell 68cts to $48.90 bbl. October Brent on the IntercontinentalExchange was 68cts lower at $51.74 bbl. NYMEX September ULSD futures were 2.10cts lower at $1.6276 gallon, off a one-week low of $1.6194. The September RBOB futures declined 2.86cts to $1.6177 gallon, off a one-week low of $1.6525. This is going to be a week packed with monthly oil supply and demand data. On Tuesday, EIA will issue its Short Term Energy Outlook, while OPEC's Monthly Oil Market Report is due Thursday, and the International Energy Agency's Oil Market Report is set for release on Friday.
George Orwel can be reached at firstname.lastname@example.org
© Copyright 2017 DTN/The Progressive Farmer. All rights reserved.