Libya’s Crude Oil Production Could Rise in June
Crude oil prices
NYMEX crude oil (VDE) (USO) (UCO) futures contracts fell 0.5% to $47.9 per barrel in electronic trade at 2:05 AM EST on June 7, 2017. Crude oil prices are trading near a one-month low. Prices fell 10.3% in the last 12 months. Lower crude oil prices have a negative impact on oil producers. Oil producers such as Apache (APA), Denbury Resources (DNR), and Carrizo Oil & Gas (CRZO) fell 12%, 61%, and 43.6%, respectively, in the last 12 months.
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Libya’s crude oil production
Libya is an OPEC member. Reuters surveys estimate that Libya’s crude oil output rose by 180,000 bpd (barrels per day) to 730,000 bpd in May 2017—a three-year high. Reuters also reported that production was at 809,000 on June 5, 2017.
Market surveys project that Libya’s crude oil exports could hit 1 MMbpd (million barrels per day) in a few weeks. It suggests that Libya’s crude oil production could surpass 1 MMbpd in June 2017. The EIA (U.S. Energy Information Administration) estimates that Libya’s crude oil production averaged 0.38 MMbpd in 2016. If Libya’s production averages 0.8 MMbpd in 2017, it would offset one-third of the reduced production from OPEC due to the production cut deal.
The production cut deal was extended for nine more months at OPEC’s meeting on May 25, 2017. Libya was exempt from the production cut deal. Higher production from Libya and the US could delay the rebalancing in the oil market. So, OPEC and Russia need to extend the production cut deal beyond March 2018.
Next, we’ll look at the API’s estimates for US crude oil inventories.