exempt from a pact to reduce supply.
In a monthly
report, the Organization of the Petroleum Exporting Countries said its output
rose by 336,000 barrels per day (bpd) in May to 32.14 million bpd led by a
rebound in Nigeria and Libya, which were exempted from supply cuts because
unrest had curbed their output.
The boost
means OPEC is pumping more than its forecast of average global demand for its
crude this year, hindering efforts to reduce a glut. But Libyan and Nigerian
output remains volatile, meaning the gain may not last.
OPEC said
oil inventories in industrialized countries dropped in April and would fall
further in the rest of the year, but a recovery in U.S. production was slowing
efforts to get rid of excess supply.
"The
rebalancing of the market is under way, but at a slower pace, given the changes
in fundamentals since December, especially the shift in U.S. supply from an
expected contraction to positive growth," OPEC said in the report.
Oil prices
gave up gains on Tuesday after the release of the report to trade toward $48 a
barrel LCOc1, below the $60 level that top OPEC producer Saudi Arabia would
like to see and less than half the level of mid-2014.
Under the
deal to support the market, OPEC is curbing output by about 1.2 million bpd
while Russia and other non-OPEC producers are cutting half as much. With the
glut slow to shift, producers agreed in May to prolong the accord until March
2018.
In the
report, OPEC pointed to continued high compliance by its members with the
supply deal and said oil stocks in industrialized nations fell in April -
although they are still 251 million barrels above the five-year average.
Supply from
11 OPEC members with production targets under the accord - all except Libya and
Nigeria - averaged 29.729 million bpd last month, according to figures from
secondary sources that OPEC uses to monitor output.
That means
OPEC has again complied more than 100 percent with the plan, according to a
Reuters calculation. OPEC did not publish a compliance number.
SAUDI
REPORTS LOWER OUTPUT
Saudi Arabia,
which has voluntarily cut production below its OPEC target, told OPEC it
lowered output further by about 66,000 bpd in May to 9.88 million bpd.
OPEC cut its
estimate of oil supply growth from producers outside the group this year to
840,000 bpd from 950,000 bpd, following the decision to extend the curbs.
It even
trimmed its forecast for growth in the United States, where shale producers
have gained impetus from the higher prices brought about by the OPEC-led cut.
U.S. output
is still expected to rise by 800,000 bpd in 2017, contributing almost all the
non-OPEC gain.
Due to the
lower supply now expected from all outside producers, OPEC raised the forecast
demand for its crude this year by 100,000 bpd to 32.02 million bpd - below its
May output.
Should the
recovery in Nigeria and Libya prove sustainable and others not cut more, the
market could remain in surplus. This could lead to calls for Nigeria and
Libya's output to be capped - a step OPEC says is too early for now.
The OPEC
production figures are for 13 members and do not yet include Equatorial Guinea,
which joined last month.
reuters*
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