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OPEC’s Oil Production Edged Higher Ahead of Key Policy Meeting

OPEC’s crude oil production rose by 29,000 barrels per day (bpd) in May compared to April as the OPEC+ group headed for the crucial June 2 meeting to decide output policy for the rest of the year.

Total crude oil production from all 12 OPEC producers averaged 26.63 million bpd in May 2024, up by 29,000 bpd compared to April, according to secondary sources in OPEC’s Monthly Oil Market Report published on Tuesday.

Crude oil output increased the most in Nigeria, according to OPEC’s secondary sources.

Africa’s top producer boosted its output by 74,000 bpd, as it looks to raise production after years of underperforming in the OPEC+ deal, which led to the OPEC+ group cutting its quota at the end of last year.

Iraq, which has failed to stick to its 4-million-bpd cap on production, pumped 4.195 million bpd last month—down by 7,000 bpd from April, but nearly 200,000 bpd above its target.

The small rise in OPEC’s oil production isn’t contributing to any bullish sentiment at all, as one part of the market was largely left disappointed by the OPEC+ group’s decisions in early June, while the other part of market participants are fretting about slowing economies that could hit global oil demand.

OPEC+ extended most oil output reductions into 2025. But it also said it could begin unwinding some voluntary cuts after the end of the third quarter of 2024—subject to market conditions.

The potential of OPEC+ barrels coming on the market in the fourth quarter of the year weighed on oil prices, which slumped by 5% in the two days following the group’s announcement on June 2.

Following the sell-off early last week, the energy ministers of the most influential OPEC+ producers presented a united front later in the week, seeking to allay market concerns about oversupply and saying that the oil production plans could always be amended or reversed.

Most analysts have commented the alliance’s announcement is bearish for oil prices because of the plan to begin unwinding some of the cuts. Most analysts don't think there would be market conditions for the group to begin gradually adding supply in the fourth quarter of 2024, either.

By Charles Kennedy for Oilprice.com

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