Oil prices dropped on Friday,July 21, after a consultancy report forecast a rise in OPEC production for July despite the group’s pledge to curb output, reigniting concerns the market will stay awash with crude.
Petro-Logistics, which tracks OPEC supply forecasts, said OPEC crude production would rise by 145,000 barrels per day (bpd) this month, taking the group’s combined output above 33 million bpd.
Higher supply from Saudi Arabia, the United Arab Emirates (UAE) and Nigeria would drive this month’s gains, it said.
The news weighed on oil prices which had been trading in positive territory for most of the session.
Benchmark Brent crude futures were down 36 cents at $48.94 a barrel at 1106 GMT, while U.S. West Texas Intermediate (WTI) crude futures traded at $46.52 a barrel, down 40 cents.
OPEC and some non-OPEC states, such as Russia, pledged to cut production by 1.8 million bpd between January this year and the end of March 2018.
The UAE minister, whose country’s oil output has been rising, said on Friday he was committed to the cut and said he hoped the deal would have a significant impact in the third and fourth quarters.
Oil traders are looking ahead to Monday’s meeting of several ministers from OPEC and non-OPEC members in Russia to see if it would address rising production from Nigeria and Libya, which have been exempted from the cuts.
Kuwaiti Oil Minister Essam al-Marzouq, whose country heads the joint ministerial committee which meets in St. Petersburg, said attendees would discuss steps for continuing implementation of the production cut agreement.
The committee, known as the JMMC, can make recommendations to OPEC and other producers to adjust the deal, if necessary.
Some analysts doubted the meeting would lead to any new intervention.
“I don’t really think the meeting will result in further output cuts. And Libya and Nigeria won’t bee too enthusiastic to cap their production,” said Frank Schallenberger, head of commodity research at LBBW.
Nigeria and Libya, both OPEC states, are exempted from the supply curbs deal and have been lifting output.
