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OPEC Oil Supply Rising in May: Petrologistics

Reuters
Wednesday, 21 May 2008 | 6:45 AM ET

OPEC oil supply in May is expected to rise by 700,000 barrels per day (bpd), led by higher output from members including Nigeria and Saudi Arabia, an industry consultant said on Wednesday.

AP

The increase comes during a month in which oil has soared to record highs and indicates OPEC is again pumping more than its supply limit after a strike in Nigeria lowered output and Saudi Arabia opted to pump more.

All 13 OPEC members are expected to pump 32.4 million bpd this month compared with a revised 31.7 million bpd in April, Conrad Gerber of tanker tracker Petrologistics, told Reuters.

"There is a strong rebound in supply," Gerber said. "Iraq is having a good export performance and Nigeria is coming back up."

Iraq is forecast to supply 2.57 million bpd, an increase of 280,000 bpd, due to rising exports of Kirkuk crude from the country's north. Improved security has allowed Iraq to boost Kirkuk shipments since last year.

Saudi Arabia, the largest producer in the Organization of the Petroleum Exporting Countries, is expected to pump 9.3 million bpd in May, up 200,000 bpd from April.

Under pressure from consuming nations concerned by oil's rally, the kingdom said last week it would boost output by 300,000 bpd to compensate for lower supply from other producers.

Record High

Oil prices were unmoved by the report of rising OPEC supply.

U.S. light, sweet crude on Wednesday topped $130 a barrel for the first time.

Nigerian supply is likely to rise by about 200,000 bpd to 2.05 million bpd, Gerber said, as supply recovers from a strike in April that shut output at Exxon Mobil's local unit.

Iran, which has been storing unsold crude at sea on oil tankers, is expected to produce about 100,000 bpd more in May, bringing supply to the market to 3.65 million bpd.

"They are still putting a lot into storage.

The heavier grades are not selling well," Gerber said.

OPEC has kept official supply limits unchanged at meetings this year, saying consumers are well supplied and has blamed factors beyond supply and demand for oil's rally, such as the weakening U.S. dollar.

Even so, the Petrologistics estimate suggests the 12 OPEC members bound by deals to set supply policy, all except Iraq, are producing 29.83 million bpd, more than their informal target of 29.67 million bpd.

Petrologistics assesses OPEC supply, which excludes oil produced but sent into storage rather than exported, by tracking tanker shipments. OPEC itself does not issue timely estimates of its members' output.

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