OPEC crude production in January remained in line with December production levels and below 30.0mmb/d according to the technical press (Figure 1). Libyan production is seen to have doubled, to around 500kb/d, following the re-start of the 350kb/d El Sharara field in early January which was shut down after worker protests and general unrest. However, OPEC crude production was checked by reduced Iraqi production, while Algerian and Angolan volumes are also seen to have eased lower. Saudi production is estimated to have dropped slightly on reduced domestic demand, while exports are also said to have been lower in January.
Iran and the IAEA have reached agreement on seven further measures to be implemented by 15 May 2014 as part of the programme agreed last November to resolve the ‘outstanding issues’, it was announced on Sunday. These measures include providing the IAEA with information and explanations relating to detonators but do not include access to the Parchin site. While these developments demonstrate continuing progress on resolving the Iranian nuclear issue, many further issues remain outstanding, suggesting that achieving a comprehensive settlement by the 20 July deadline of the initial agreement is likely to prove highly challenging, in our view.
Net managed money futures and options positions on the ICE in Brent, regarded as the most directionally driven speculative category, dropped 14.2% or 13,995 positions in the week ended 28 January. That was more than enough to reverse the rise in speculative net longs in the previous two weeks to take the metric to 84,276 positions, the lowest since mid-November 2012 (Figure 2). Over that period, Brent closed down USD 1.63/bbl (-1.5%) WoW to USD 105.78/bbl.
On the other side of the Atlantic, net managed money futures and options positions on NYMEX in WTI rose 6.0%, or 15,649 positions to 275,931 positions, the highest since mid-September 2013. In that week, WTI dropped USD 0.22/bbl WoW to USD 97.19/bbl, leaving the WTI discount to Brent at USD 8.59/bbl. The narrowest since mid-October 2013. Since then, Brent and WTI have edged closer to USD 110/bbl and USD 100/bbl, respectively.
OPEC crude production in January appears to have come around the 29.8mmb/d ‘call on OPEC crude’ the IEA has in the January Oil Market Report (see IEA Data, of 22 January). Although it is only the start of the year, with Libyan production down again on further unrest (El Sharara output is reportedly down 40% following an attack on a key pipeline) and US production growth lacklustre in January (see EIA Data – No growth, of 6 February), the ability of OPEC (or Saudi Arabia) to manage output to balance the market, should that be required, is being made easier.
The EIA is scheduled to publish its Short-Term Energy Outlook today, while OPEC publishes its Monthly Oil Market Report tomorrow. The IEA is due to release its February Oil Market Report on Thursday.