about supply disruptions not just out of Canada but also a series of attacks on Nigeria’s oil infrastructure which pushed the country’s crude output close to a 22-year, cumulatively knocking out 2.5 million barrels of daily production.
However, two stories that oil traders are ignoring in today’s action is the latest out of Saudi Arabia where Saudi Aramco, the state oil company, announced it was raising production to capture more customers as it pushes ahead with what could be the world’s biggest stock market listing next year the FT reported earlier. Additionally, Kuwait’s head of research at state-owned Kuwait Petroleum said the country aims to produc a record 4 million a barrels a day by 2020, a major increase of nearly 50% compared to its recent 2.8mmbpd output recorded in March.
First, back to Saudi Arabia, where in some of the first comments since a major government reshuffle at the weekend, Saudi Aramco chief executive Amin Nasser emphasized the company’s willingness to compete with rivals, putting oil producers from regional adversary Iran to US shale producers on notice.
“Whatever the call on Saudi Aramco, we will meet it,” he said during a rare media visit to the headquarters of the state oil company in Dhahran. “There will always be a need for additional production. Production will increase upward in 2016.”
As we noted over the weekend when analyzing the recent Saudi oil minister succession, Mohammed bin Salman, deputy crown prince, hinted that the kingdom could easily accelerate output to more than 11m b/d as Iran, Riyadh’s regional rival, tries to attract customers after years of sanctions. Saudi Aramco, which pumps more than one in every eight barrels of crude globally, is at center of a reform program being pushed by Prince Mohammed, who has emerged as the man holding the main levers of power in Saudi Arabia.
Last year Saudi Arabia’s crude output averaged 10.2m b/d, Mr Nasser said, the highest annual level on record. He indicated the increase in 2016 would supplant high-cost output in other parts of the world, which has started to decline after almost two years of falling prices. “We are seeing a global increase in demand,” said Mr Nasser, citing growing consumption in India, the US and other parts of the world. He was explicitly focusing on China where as noted before, the Saudis have lost substantial ground to Russian exports and are rushing to retake market share as Chinese teapot refineries have boosted production in recent months.
As the FT adds, Nasser did not specify how much Aramco’s production will rise in 2016, but said the company was prepared to meet additional domestic demand this summer, when the country’s output usually rises to meet heightened domestic electricity demand as the use of air-conditioning soars. Last June production reached a high of 10.56m b/d.
Nasser added that Saudi Arabia’s production capacity was 12.5m b/d with all but 500,000 b/d controlled by Aramco. He also said that the latest stage of an expansion project at the Shaybah oilfield in the south-east would be finished in a couple of weeks, adding 250,000 b/d of production capacity and taking the field’s output to 1m b/d. This would help offset falling output at other, mature fields.
But while the Saudi production boost remains speculative, another OPEC member nation that is set to see its output soar in the coming months is Kuwait, which is targeting an almost 50% increase in oil production over the next four years in a bid to secure future economic growth for the oil-dependent nation, a Kuwaiti oil official said on Tuesday.
Speaking at the Platts Crude Oil Summit in London, Abdulaziz Al Attar, head of research at state-owned Kuwait Petroleum Corp., said the country aims at producing 4 million a barrels a day by 2020 and maintaining that level through 2030, reiterating its goal of ramping up production.
According to MarketWatch, such an increase would mark a 44% jump on Kuwait’s output of 2.77 million barrels a day in March, according to the latest monthly report from OPEC. It would also be the country’s highest output level ever, according to Bloomberg data. “We also intend to provide fuel stock capabilities to counter for seasonality and domestic energy demand,” Al Attar said at the conference.
The comments come after a three-day strike in Kuwait sent its oil production tumbling to 1.5 million a day in April. However, Al Attar brushed off concerns that similar events would significantly impact production in the future. “I don’t think there will be any future risks of strikes,” he said. The oil representative said Kuwait plans to grow domestic refining capacity to 1.4 million barrels a day and boost international cooperation.
So while the world awaits that elusive jump in demand which is the catalyst for all this upcoming excess production, in the meantime oil continues to pile up. And, as Reuters, writes, with plenty of crude available, refiners have produced large volumes of gasoline and diesel, threatening to swamp demand despite the coming U.S. summer driving season.
For now, however, oil is doing precisely that, going up as algos have resumed control over the trend and supply/demand imbalance fundamentals have been put squarely away for the time being.
This article is brought to you courtesy of Tyler Durden From Zero Hedge.