04/08/2009
OPEC oil supply rose for a third
month in July as higher output from Saudi Arabia, Angola and
Iraq offset cutbacks in Nigeria caused by militant attacks, a
Reuters survey showed on Monday.
Supply from the 11 members of the Organization of the Petroleum Exporting Countries with output targets rose to 26.07 million barrels per day (bpd) from 26.02 million bpd in June, the survey of oil firms, OPEC officials and analysts found.
The survey suggests OPEC has made 71 percent of promised supply cutbacks, down from 72 percent in June. Analysts said rising oil prices and the prospect of recovering demand may be encouraging members to pump out extra barrels.
"OPEC is taking advantage of where prices currently are to gradually increase output, with a view to coping with the further recovery in Chinese demand two to three months down the line," said Helen Henton, head of commodities research at Standard Chartered Bank.
"OPEC will be very happy with prices around about here for now given the state of the economy. Though when the economy recovers, they could seek higher prices still."
The group has agreed to cut supply by 4.2 million bpd since September as the economic crisis eroded demand. OPEC maintained its output ceiling at its last meeting, held in May, and next meets to set oil policy on Sept. 9.
Supply was 1.23 million bpd higher in July than the implied target for the OPEC 11 of 24.84 million bpd, according to the survey, meaning the group lowered output by 2.97 million bpd of the promised curbs.
Oil prices have rallied to almost $72 a barrel from below $33 in December. But with outside factors such as rising stock markets powering oil's gain, some in the industry say OPEC is taking a risk by pumping more crude.
"Output is going up and the rally is financially driven, which is part of the problem OPEC is facing," said one oil executive.
OPEC's adherence to its supply curbs peaked at 81 percent in April and March, according to Reuters estimates. Compliance remains high compared to the historical average, which is 60 percent according to the International Energy Agency.
Oil rose on Monday as positive Chinese economic data bolstered hopes of economic recovery and higher oil demand. U.S. crude <CLc1> was up $2.45 a barrel at $71.90 as of 1416 GMT.
