WASHINGTON (DTN) -- New York Mercantile Exchange spot month oil futures and Intercontinental Exchange Brent crude moved modestly higher in early morning Friday, as crude production from the Organization of the Petroleum Exporting Countries slumped to a better than five-year low in July while concerns over weakening outlook for oil demand capped the upside.
At just about 9 a.m., September West Texas Intermediate crude futures traded 33 cents higher at $54.80 per barrel (bbl) while the ICE October contract added 54 cents to $58.77 bbl.
September RBOB futures traded up 1.83 cents at $1.6547 gallon and NYMEX September ULSD futures edged up 0.27 cents to $1.8134 gallon.
Crude production from the 14-member group of oil producing nations plunged 246,000 barrels per day (bpd) last month to a 29.61 million bpd, OPEC said Friday morning in its Monthly Oil Market Report citing secondary sources. The group's output declined for the 10th consecutive month in July, aided by quota over compliance from Saudi Arabia along with steep production declines in Iran and Venezuela.
According to MOMR, Saudi Arabia pumped 143,000 bpd less in July to reach production rate of 9.698 million bpd, the lowest in more than five years. The second largest source of decline came from Iran, down 47,000 bpd to 2.213 million bpd, with production further eroded last month by stringent US sanctions. In Venezuela, crude output fell 32,000 bpd to 742,000 bpd amid ongoing struggles with power outages and mismanagement under Maduro's regime. Both Iran and Venezuela are not part of the OPEC agreement.
The sizable decline was realized even though six of the group's members posted production gains, exceeding their quotas under OPEC agreement. Crude production in Iraq unexpectedly increased by 32,000 bpd to 4.753 million bpd, with output is well above Iraq's 4.512 million bpd allotment under the accord. Crude production in Algeria was up 22,000 bpd in July to 1.027 million bpd, also slightly above the country's quota. Crude production in Nigerian crude output slipped 21,000 bpd to 1.786 million bpd, while still above than a 1.685 million bpd allotment under the production agreement.
On the demand side, OPEC lowered its global consumption growth for this year to 1.1 million bpd, down 40,000 bpd from its July forecast while its 2020 demand growth estimate at 1.14 million bpd was steady with the month prior. According to the report, demand for OPEC crude in 2019 was revised up by 0.1 million bpd from the previous month report to stand at 30.7 million bpd. Demand for OPEC crude in 2020 was lifted by 0.1 million bpd at 29.4 million bpd, but still 1.3 million bpd lower than the 2018 level.
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