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Libya, Nigeria Boost OPEC Output To Record Levels

According to an analysis by Reuters published on Monday, oil production among the Organization of the Petroleum Exporting Countries (OPEC) will likely reach another record high for the month of October.

Based on shipping data and information from industry sources, the Reuters survey believes that output for October has jumped to 33.82 million barrels per day (bpd) from a revised 33.69 million bpd in September. This would represent some 820,000 bpd above the top end of a target output range that OPEC representatives agreed to adopt at a meeting on 28 September.

The boost in output was primarily led by three states attempting to bounce back from armed conflict and militant violence: Nigeria, Libya and Iraq. In the case of Nigeria, exports of Qua Iboe and Forcados crude resumed following a decrease in rebel activity. Increased exports from Iraq’s northern and southern ports helped its supply spike from 4.52 million bpd in September to 4.58 million bpd the next month. The reopening of some major Libyan terminals has helped jumpstart production, though it remains at a fraction of what it was prior to the ouster of strongman Muammar Gaddafi in 2011.

Other countries faced mostly positive results, such as Saudi Arabia whose supply is close to peaks seen in the middle of this year. Output for the United Arab Emirates and Kuwait is believed to be higher than estimated. Earlier this year, Iran enjoyed production increases with the removal of international sanctions, but production has slowed in recent months. Output for Angola and Gabon was on the low side due to maintenance work and an employee’s strike, respectively.

The gains in production may not bode well for the OPEC collective, Reuters reported, in that it could “add to skepticism” for the cartel’s ability to finalize a plan created a little over two months ago to limit supplies.

"With OPEC production creeping up toward 34 million barrels a day, a production freeze guarantees that the oil market will remain out of balance throughout 2017 and into 2018," said David Hufton of oil broker PVM to Reuters regarding the current oversupply in the oil market.

Worries regarding oversupply seem to have manifested themselves in trading on Monday as WTI and Brent crude oil futures fell to their lowest marks since 27 September. WTI lost nearly 4 percent of its value in one day while Brent tumbled by 2.8 percent.

By Erwin Cifuentes for Oilprice.com

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