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OPEC Energy Production Fell In August, Oil Stuck At $50?

13 September 2017

Despite the efforts to cut output, the oil price has struggled to push durably above $50 a barrel.

Longer term, the United States should strengthen its energy security to address events, such as hurricanes, by potentially adding oil products to government-held inventories, the IEA said.

In addition, Hurricane Harvey has hampered oil production during August and the first weeks of September. A quarter of US refining capacity to be taken off-line due to the hurricane, sapping demand. Refinery utilization rates fell by 2 percentage points to 77.7 percent, the lowest rate since 2008.

Meanwhile, the market continued to assess Hurricane Irma's effect, as many refineries are restarting right now and lifted demand for American crude.

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Mr Bozumbayev told Mr Al Falih that "despite the gradual ramp up of the giant Kashagan field this year, Kazakhstan was able, through reducing production in other fields in August, to achieve more than full conformity with its voluntary production level".

But with oil demand perking up as well as hurricanes and regular summer maintenance knocking out some production, the IEA said it has seen some of that glut disappear. We also saw a reduction in number of oil rigs which will further be price supportive.

"Non-Opec oil supply is expected to grow by 0.78 mpbd in 2017, unchanged from the last month due to offsetting revisions in Kazakhstan and U.S. supply".

"Global economic growth momentum has gained traction lately and has become more balanced, with all major economies now showing positive growth this year, a trend that is forecast to continue into 2018", OPEC said in its report. The Economic Development Ministry reported growth in gross domestic product in July was 1.5 percent, which marks a slight slowdown, but still an improvement from the negative GDP from past year.

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Reports also suggest that Saudi will cut allocations by 0.35 mbpd in October. Output also dropped in Iraq.

The supply of oil has been hit by unplanned outages combined with scheduled maintenance in Libya - a member of Organisation of Petroleum Exporting Countries, or OPEC.

Saudi Arabia Crude Oil Refinery Outlook to 2022 is a comprehensive report on crude oil refinery industry in Saudi Arabia. Compliance to output cuts improved from 84% in July to 89%.

WTI futures dropped more than 3% on Friday even as the number of oil rigs operating in the USA fell by three to 756, still remaining near the highest level since April 10, 2015, according to data from energy services firm Baker Hughes (BHGE), which tracked the seven-day period ended September 8. The commercial crude inventory remains in the upper half of the average range for this time of year.

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Crude inventories increased to 468.2 million barrels, although there was still a year-on-year decline of 2.5%.

OPEC Energy Production Fell In August, Oil Stuck At $50?