NationalMirror OPEC’s influence on oil market weakens by UDEME AKPAN on Aug 12, 2013 | Posted under: Highlights, News • As US, Sudan, others pump more crude The influence of the Organisation of Petroleum Exporting Countries, OPEC, on global energy supply will dwindle in coming years as the United States and other producers pump more crude to the volatile oil market. Non-OPEC supply is expected to rise by one million barrels per day this year, following a minor upward revision as well as higher-than-expected United States output. A new report by OPEC, which disclosed this at the weekend, also stated that: “In 2014, non-OPEC oil supply is forecast to grow by 1.1mbpd, supported by projected increases in the US, Canada, Brazil, the Sudan and Kazakhstan. “OPEC NGLs (natural gas liquids) and non-conventional oils are projected to increase by 0.2mbpd in 2013 and 0.1mbpd in 2014. In July, total OPEC crude oil output averaged 30.31mbpd, according to secondary sources, representing a drop of 0.10mbpd from the previous month.” According to the report, the demand for OPEC crude in 2013 is forecast to average 29.9mbpd, almost unchanged from the previous report and 0.4mbpd lower than the year before. The report added that in 2014, demand for OPEC crude would experience a slight change since the previous report to stand at 29.7mbpd, representing a decline of 0.3mbpd compared to the year before. It added that improved pipeline networks and the use of rail links had facilitated the efficient movement of crude from inland to refiners on the coasts, thus assisting to unlock a glut at America’s oil-storage hub at Cushing, Oklahoma. The report quoted the US Energy Information Administration as estimating that new projects would provide 1.15mbpd of additional pipeline capacity to deliver crude from Cushing to the US Gulf Coast, with another 830,000bpd to move crude directly from the Permian Basin in Texas to the US Gulf. It maintained that starting in 2011, the rail volume increased and the total amount of crude oil and refined products being transported by rail was close to 1.34mbpd during the first half of 2013, up from 927,000bpd during the first six months of last year. The report said: “WTI (West Texas Intermediate) also got a further boost as refiners in the US consumed more crude than at any time in almost eight years. “During the week ending 12 July, refiners processed more than 16.2mbpd, which corresponds to a refinery utilisation rate of almost 93 per cent.” It added that inventories in Cushing rose to almost 52mb at the beginning of the year as a result of oversupply before falling to around 42mb at the end of July. The report stated that the decline in stocks had encouraged some money managers to bet on the recovery in WTI prices, contributing to narrowing the spread between WTI and Brent. It stated that the completion of improvements to BP’s refinery in Whiting, Indiana, which is now absorbing close to 400,000bpd of the surplus crude, helped to relieve the glut. The report added that this surge in Midwest refinery demand, coupled with shortened supply from Alberta, Canada, on up-grader maintenance and pipeline shutdowns, had helped the gap to tighten. It stated that while the spread had converged significantly and had a positive impact on US domestic oil producers, the profits from shipping oil by rail were shrinking, making pipeline deliveries more attractive and slowing the demand for train cargoes. According to the report, refineries in the US East Coast and eastern Canada that traditionally import foreign crudes from the Atlantic Basin have benefited from growing output from North Dakota, where prices have been cheaper than North Sea Brent and West African grades, enough to cover the cost of rail shipments. Analysts have expressed fears that the continued production and export of American and other crudes would likely affect the economic fortunes of OPEC member states, especially Nigeria which previously had America as its major importer. The National President of the Oil and Gas Service Providers Association, Mr. Colman Obasi, said in a telephone interview that: “The increasing dominance of the United States and others will certainly affect OPEC members, particularly Nigeria since America had been the nation’s major oil importer for several years.” He added that there was increasing need for the country and other producers to diversify their foreign exchange generating base in order to cope with the present and future realities in the market. The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, has already observed that: “The world is now becoming more competitive, the U.S shale oil is already affecting our oil export to the US, bearing in mind that the US is one of our major trade partners in this sector.”
Posted on: Mon, 12 Aug 2013 12:12:04 +0000
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