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Kazakhstan|business|January 19, 2017 / 11:44 AM
OPEC output drops in December for first time since May

AKIPRESS.COM - OPEC said its output fell for the first time in seven months and forecast a drop in output from Russia, its partner in an agreement to clear the global crude surplus, Bloomberg reported.

Saudi Arabia, OPEC’s biggest member, reduced production last month ahead of an accord that took effect on Jan. 1, the Organization of Petroleum Exporting Countries said in a report Wednesday. Still, with the group pumping considerably more than it expects will be needed next year, it will need to push on with promised cutbacks to rebalance global markets.

Twenty-four oil producers led by OPEC and Russia agreed last month to jointly cut their output in a bid to end a three-year oil surplus, which has weighed on prices and battered the economies of energy-producing nations. While these nations have said they are swiftly implementing the reductions, there are signs that the resulting higher prices could trigger increased production elsewhere.

OPEC sees supplies from outside the group growing in 2017 at only half the rate it predicted a month ago, with an expansion of 120,000 barrels a day, on reduced estimates for its partners Russia and Kazakhstan, as well as other producers such as China and Norway.

Russian output will slide by 245,000 barrels a day to average 10.975 million a day in the first half, compared with the fourth quarter, according to the monthly report from OPEC’s Vienna-based research department.

Still, it boosted its outlook for U.S. oil supplies by 230,000 barrels a day as a price recovery encourages drillers to deploy more rigs. The International Energy Agency’s Executive Director Fatih Birol said in a Bloomberg television interview that price gains following OPEC’s deal will trigger a “significant” increase in U.S. shale output.

Production from OPEC’s 13 members fell by 220,900 barrels a day to 33.085 million a day in December, led by the declines in Saudi Arabia and Nigeria. The data excludes Indonesia, which left the group in late November. The kingdom’s output fell by 149,300 barrels a day to 10.474 million, according to OPEC’s estimates.

Data provided directly by Saudi Arabia to the organization, also included in the report, showed an even bigger decrease, of 254,700 barrels a day to 10.465 million.

The declines still leave OPEC’s production about 1.8 million barrels a day higher than the average of 31.3 million it expects will be needed in the first half, underscoring the group’s need to press on with production cuts.

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