"These numbers are fairly bearish for OPEC," says John Kingston, Platts global director of oil. "At almost 28.8 million b/d, OPEC is producing more oil than the International Energy Agency (IEA) has estimated is necessary for the supply and demand to balance in the fourth quarter, by almost a million barrels per day."
It's also more than the strong 28.1 million b/d the IEA calls for in the first quarter of next year, and significantly above the full-year 2010 call of 27.4 million b/d, said Kingston. "When combined with the fact that stocks already are high, it raises the prospect of a scenario where supply is going to outstrip demand for the balance of the year, and what storage is out there may be very attractive to traders looking to sell out into higher-priced months in the future," he added.
Iraqi volumes increased to 2.55 million b/d in August from 2.45 million b/d in July. Smaller increases of 50,000 b/d, 40,000 b/d, 20,000 b/d and 10,000 b/d came from Saudi Arabia, Angola, Venezuela and Iran, respectively.
The latest estimates leave the OPEC-11 overproducing their 24.845 million b/d target by some 1.4 million b/d.
Compliance with the 4.2 million b/d of cuts agreed late last year has been declining since April alongside a broad firming of oil prices. Having peaked at close to 82% in March, compliance fell to 66.8% in August, Platts calculates.
OPEC ministers are expected to maintain the current official output target when they meet in Vienna Wednesday but to call for stricter compliance with quotas. Several senior ministers and officials have said they do not expect the oil producer club to adjust official levels.