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Global oil production dips but still strong

The supply fell by 155,000 barrels a day (b/d) in May to 96m b/d, according to the International Energy Agency

Global oil production fell by 155,000 barrels a day (b/d) in May to 96m b/d as lower non-Opec output offset a small increase from Opec. While yearly gains eased from March and April’s highs, growth nevertheless stood at a robust 3m b/d, split roughly equally between non-Opec and Opec countries, the latest data from the IEA shows.

Opec crude supply edged up 50,000 b/d in May to 31.3m b/d – the highest since August 2012. Saudi Arabia, Iraq and the UAE pumped at record monthly rates to keep Opec output more than 1m b/d above the group’s official 30m b/d supply target for a third month running.

Barring unforeseen outages, Opec is likely to keep pumping at around 31mn b/d during the coming months as Middle East producers sustain higher rates to preserve market share and meet summer domestic demand.

Elsewhere, lower oil prices and a drop in capital spending are taking time to curb non-Opec supply, with growth for 2015 revised up by 195,000 b/d since the IEA’s last report in May, to nearly 1m b/d. An upward revision to the US baseline and the expectation of fewer summer field maintenance shutdowns than previously forecast in the North Sea and Former Soviet Union underpin the higher number.

In May, non-Opec supply was estimated to have fallen by 200,000 b/d to 58 m b/d, as wildfires and scheduled repairs lowered Canadian output and maintenance in the North Sea got underway.

Over in the US, oil production estimates have been upped by 90,000 b/d for the fourth quarter 2014 and more than 200,000 b/d for the first quarter 2015. As such, US total liquids growth was lifted to 1.6 m b/d in 2014, and more than 1.7m b/d in the first quarter of this year. Nevertheless, sharp cuts in drilling rates are starting to curb supplies. In all, US oil production is expected to average 12.7m b/d in 2015, up 0.8m b/d from a year ago.

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