EMEA News
OPEC Exports Rise Once More Along With Resistance to Deeper Cuts
More bad news came Wednesday for those hopeful that the Organization of the Petroleum Exporting Countries (OPEC) would be responsible for a market rebalance as promised, with reports that the cartel's oil exports climbed for a second month in June.
According to Thomson Reuters Oil Research data, OPEC exported 25.92 million barrels per day (bpd) last month, up 450,000 bpd from May and 1.9 million bpd more than a year earlier.
This comes on the heels of disclosures last week that shipments from Saudi Arabia and other OPEC members rose in June, and it compelled the International Energy Agency to tell Reuters the obvious: that all this activity could hamper expectations that the supply and demand balance will return closer to normal in the second half of this year.
OPEC's continued failure to make inroads in the global glut caused West Texas Intermediate on Wednesday to drop $1.58 to $45.49 and Brent to sink $1.38 to $48.23.
But this was just the first of a one-two punch to OPEC supporters: unnamed Russian government officials told Bloomberg that their country will oppose any proposal for deeper production cuts at the cartel's ministerial meeting later this month.
They added that the reason for Russia's stance was that any further reductions so soon after the output agreement was extended into next year would send the message to the market that Russia and their allies are nervous that their deal isn't doing enough to support prices.
They went on to say that the longer the output restrictions remain in place, the worse the volatility will be when the accord expires next year.
While skepticism about OPEC's ability to positively affect the market is nothing new, outright hostility from many analytical quarters against the organization erupted in May shortly after it agreed to extend its cuts by nine months; Tamar Essner, director of energy and utilities at Nasdaq Corporate Solutions, calculated that OPEC needs to force a drop of about 300 million barrels in addition to the extension, which means not only pumping less but curtailing exports that are filling storage facilities globally.
