OPEC oil production reaches eight-year high

OPEC has reported an increase in its oil production for September to the highest in at least eight years and has raised its forecast for 2017 non-OPEC supply growth, pointing to a larger surplus next year despite the group’s deal to cut output.

OPEC countries pumped 33.39 million barrels per day last month, according to figures Opec collects from secondary sources, up 220,000 barrels from August, the organisation said in a monthly report yesterday.

The figures underline Opec’s challenge in seeking to restrain supplies for the first time since 2008 to curb a persistent supply glut and prop up prices.

Oil is trading near $53 a barrel, less than half the price hit in mid-2014.

To speed up a rebalancing of the market, Opec agreed at a meeting in Algeria, last month, to cut supply to between 32.50 million barrels and 33 million.

The group hopes to finalise details, including how much each of the its 14 members can pump, at a meeting in November.

The report showed the supply boost in September mostly came from Libya and Nigeria, which are restoring output after disruptions, and from Iraq, which has questioned the accuracy of Opec’s secondary-source figures.

Opec also raised its forecast of non-Opec supply next year, saying output from outside the group would rise by 240,000 barrels per day, up 40,000 barrels from an earlier forecast due to a higher forecast for Russia.

With demand for Opec crude in 2017 expected to average 32.59m barrels, the report indicates there will now be an average surplus of 800,000 barrels if Opec keeps output steady.

Last month’s report pointed to a 760,000 barrel surplus.

Opec made no change to the global oil demand outlook, predicting demand growth of 1.15m barrels in 2017.

Russian president Vladimir Putin said, yesterday, he saw no obstacles to a global agreement on an oil output freeze.

Meanwhile, yesterday proved a mixed day for Irish-related oil stocks.

Tullow Oil’s share price fell nearly 6% in Dublin trading but was stable in London despite a bullish research note from Davy Stockbrokers, which forecast the company will generate $230m in positive free cashflow next year and its South American exploration acreage to be the source of a new growth phase for the company.

“It may not be fashionable to say so, but exploration will swing back into vogue at some point.

“We think the Suriname-Guyana basin/region has the potential to be the source of the next phase of growth for Tullow.

“This is recognised as one of the few remaining basins with potential to deliver substantial new resources,” Davy said.

Tullow’s share price is up nearly 70% in the year to date.

Shares in Dublin-based, Russian-focused explorer PetorNeft Resources jumped 14% on the back of a positive production update and Falcon Oil & Gas announced a fresh oil discovery by one of its partners in Australia.

John Teeling’s Clontarf Energy also announced that a proposed work programme on its Tano acreage offshore Ghana has been submitted to the Ghanaian authorities in Accra.

The AIM-traded firm said the new work programme will form part of the ongoing negotiations regarding the terms of acquiring an exploration licence for the Tano Basin acreage.

Additional reporting by Reuters