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OPEC Pumping Oil at Record Levels Ahead of Crunch Meeting

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  • OPEC Pumping Oil at Record Levels Ahead of Crunch Meeting

Output by OPEC oil producers has reached record levels, the International Energy Agency said Thursday, raising fears a global oil glut will continue to weigh on markets unless the cartel agrees on a cut.

Production by the 14 members of OPEC rose to a record 33.83 million barrels a day in October, the IEA said, just weeks ahead of talks aimed at hammering out a deal to curb production.

In a surprise move, OPEC (the Organization of the Petroleum Exporting Countries) members, led by oil kingpin Saudi Arabia, agreed in Algiers in September on a deal to trim production, sending crude prices surging.

The accord aims to stabilise prices that have dramatically fallen since 2014, deeply hurting producers across the board, but its details are to be determined at OPEC’s meeting on November 30 in Vienna.

The Paris-based IEA, which advises oil consuming nations on energy issues, said OPEC had hiked its output for five months running, led by Iraq and Saudi Arabia.

“October proved to be another record-breaking month for OPEC, with crude oil output rising 230,000 barrels a day to 33.83 million barrels a day,” it said in its monthly report on the oil market.

Its October level was “well in excess of the high end of the proposed output range” of between 32.5 mb/d and 33.0 mb/d agreed by OPEC in Algiers, the agency said.

“This means that OPEC must agree to significant cuts in Vienna to turn its Algiers commitment into reality,” it added.

Production has outpaced demand over the past two years, with the resulting supply glut hammering prices from highs of more than $100 a barrel in June 2014 to near 13-year lows below $30 in February this year.

Prices are currently hovering above $45 a barrel.

The IEA said that if OPEC implemented its production ceiling, the market would “move from surplus to deficit very quickly in 2017”, although the stock overhang would take time to run down.

But it added that “if no agreement is reached and some individual members continue to expand their production, then the market will remain in surplus throughout the year, with little prospect of oil prices rising significantly higher”.

– Hike in non-OPEC output –

Production by countries outside of OPEC, meanwhile, is set to fall this year but is expected to rise in 2017 more than previously expected, led by Russia, the IEA said.

Supply growth by non-OPEC countries will increase by 500,000 barrels a day next year, an increase of 110,000 barrels a day from the IEA’s previous forecast.

As well as Russia, Brazil, Canada and Kazakhstan are set to drive non-OPEC supply growth in 2017.

“This means that 2017 could be another year of relentless global supply growth similar to that seen in 2016,” the report said.

Analysts said Donald Trump’s victory in the US presidential election could also increase pressure on OPEC to cut production.

Jeffrey Halley, senior market analyst at OANDA, said the president-elect’s campaign pledges, if implemented, may lead to higher oil production in the United States.

“Less red tape and taxes should theoretically lead to higher oil production in the United States.

“Not good news for OPEC and non-OPEC members trying to thrash out a production cut.

“Oil’s post election afterglow may turn black gold to fools gold as the street gets back to reality,” he said in a note to clients.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Communities in Delta State Shut OML30 Operates by Heritage Energy Operational Services Ltd

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The OML30 operated by Heritage Energy Operational Services Limited in Delta State has been shut down by the host communities for failing to meet its obligations to the 112 host communities.

The host communities, led by its Management Committee/President Generals, had accused the company of gross indifference and failure in its obligations to the host communities despite several meetings and calls to ensure a peaceful resolution.

The station with a production capacity of 80,000 barrels per day and eight flow stations operates within the Ughelli area of Delta State.

The host communities specifically accused HEOSL of failure to pay the GMOU fund for the last two years despite mediation by the Delta State Government on May 18, 2020.

Also, the host communities accused HEOSL of ‘total stoppage of scholarship award and payment to host communities since 2016’.

The Chairman, Dr Harrison Oboghor and Secretary, Mr Ibuje Joseph that led the OML30 host communities explained to journalists on Monday that the host communities had resolved not to backpedal until all their demands were met.

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Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins

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Oil Prices Recover from 4 Percent Decline as Joe Biden Wins

Crude oil prices rose with other financial markets on Monday following a 4 percent decline on Friday.

This was after Joe Biden, the former Vice-President and now the President-elect won the race to the White House.

Global benchmark oil, Brent crude oil, gained $1.06 or 2.7 percent to $40.51 per barrel on Monday while the U.S West Texas Intermediate crude oil gained $1.07 or 2.9 percent to $38.21 per barrel.

On Friday, Brent crude oil declined by 4 percent as global uncertainty surged amid unclear US election and a series of negative comments from President Trump. However, on Saturday when it became clear that Joe Biden has won, global financial markets rebounded in anticipation of additional stimulus given Biden’s position on economic growth and recovery.

Trading this morning has a risk-on flavor, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”

The president-elect and his team are now working on mitigating the risk of COVID-19, grow the world’s largest economy by protecting small businesses and the middle class that is the backbone of the American economy.

There will be some repercussions further down the road,” said OCBC’s economist Howie Lee, raising the possibility of lockdowns in the United States under Biden.

“Either you’re crimping energy demand or consumption behavior.”

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Nigeria, Other OPEC Members Oil Revenue to Hit 18 Year Low in 2020

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Revenue of OPEC Members to Drop to 18 Year Low in 2020

The United States Energy Information Administration (EIA) has predicted that the oil revenue of members of the Organisation of the Petroleum Exporting Countries (OPEC) will decline to 18-year low in 2020.

EIA said their combined oil export revenue will plunge to its lowest level since 2002. It proceeded to put a value to the projection by saying members of the oil cartel would earn around $323 billion in net oil export in 2020.

If realised, this forecast revenue would be the lowest in 18 years. Lower crude oil prices and lower export volumes drive this expected decrease in export revenues,” it said.

The oil expert based its projection on weak global oil demand and low oil prices because of COVID-19.

It said this coupled with production cuts by OPEC members in recent months will impact net revenue of the cartel in 2020.

It said, “OPEC earned an estimated $595bn in net oil export revenues in 2019, less than half of the estimated record high of $1.2tn, which was earned in 2012.

“Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programmes, and support public services.”

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