(FinancialPress)—For the second straight day, oil prices received a boost, on news of the latest OPEC report’s revelation that the cartel’s oil production fell last month.
The monthly report, released Tuesday morning by the Organization of the Petroleum Exporting Companies (‘OPEC’), stated that August output feel by 79,000 barrels per day, down to 32.76 million barrels per day.
Following a summer that saw production inexplicably rise, amidst Saudi Arabia’s mulling over of a possible production-cut extension, the report quelled some fears over whether the stated production cut was in fact working.
The report puts much of the blame on reduced output from Libya, Gabon, Venezuela, and Iraq in particular.
In the case of Libya, which was exempt from last year’s deal, production had been rising steadily for the two months prior. The North African nation has a target of 1.25 million barrels a day. However, Libyan production slid significantly (down 112,300 in August) to only 890,000 barrels a day last month, on account of pipeline closures, and other oil field disruptions.
Upon the report, the globally recognized Brent oil price for November added $0.48 (nearly 1%), moving up to $54.32 per barrel, while the North-American-focused West Texas Intermediate (WTI) crude oil price for October delivery gained $0.16 (0.3%) to $48.23 per barrel.
That said, prior expectations for an already healthy weekly rise in US crude oil supplies helped limit the overall climb for the oil price. Shutdowns from refineries in the wake of Hurricane Harvey put pressure downward on demand, which in turn bumped up inventories as refineries wait to get back online.
The production slowdown comes on the heels of Saudi Arabia’s open debate on whether to extend the OPEC production accord beyond March 2018 expiry date.
Non-OPEC production also fell during August, as disruptions from Hurricane Harvey made landfall on August 25th, and wreaked havoc across the top US oil producing regions of Texas and Louisiana.
The hurricane took several Gulf Coast refineries off-line, which led to a noticeable rise in crude inventories for the last week of the month, according to the Energy Information Administration.
The EIA’s own updated report covering the following week (ending September 8th), is expected to be released tomorrow, while the American Petroleum Institute will also be releasing its weekly inventory report later today.
A poll of analysts led by S&P Global Platts showed the experts expect the EIA’s report to show a rise of 10.1 million barrels in crude supplies.
Robbie Frased, commodity analyst at Schneider Electric, stated in a note: “(The market) will be paying greater attention than usual (to the inventory numbers, thus giving) the clearest picture to date of the fundamental impact to the oil market from Hurricane Harvey.”
The oil refineries coming back on-line after taking on damage from Harvey, are starting to resume activity, and are ramping up to get back to full capacity.