Oil Declines as Iraq Pumps Crude at Record Pace Amid Supply Glut

by **Ponee** Mon Jan 19, 2015 9:19 am

Oil declined as Iraq pumped crude at a record pace, with the second-biggest producer in the Organization of Petroleum Exporting Countries planning to boost exports this year. Futures lost as much as 1 percent in New York and 0.9 percent in London. Average Iraqi output is at 4 million barrels a day, Oil Minister Adel Abdul Mahdi said at a news conference after meeting his Turkish counterpart, Taner Yildiz, in Baghdad. U.S. producers idled a record number of drill rigs during the past six weeks, according to data from Baker Hughes Inc. Crude slumped almost 50 percent last year as the U.S. pumped oil at the fastest rate in more than three decades while OPEC resisted calls to cut supply. Producers outside the group will boost output this year at a slower rate than previously forecast, according to the International Energy Agency. “The bigger picture remains from a fundamental point-of-view,” Ric Spooner, a chief strategist at CMC Markets in Sydney, said by phone. “We have a supply surplus and there is yet to be any significant news of reduction in capacity so the market remains very vulnerable to further price decline. West Texas Intermediate for February delivery, which expires on Jan. 20, slid as much as 50 cents to $48.19 a barrel on the New York Mercantile Exchange and was at $48.35 at 1:38 p.m. in Sydney. The more-active March future fell 46 cents to $48.67. The volume of all futures traded was about 10 percent below the 100-day average. Prices rose 0.7 percent last week.
Iraq Output

Brent for March settlement was down 46 cents at $49.71 a barrel on the London-based ICE Futures Europe exchange. It gained 3.9 percent to $50.17 on Jan. 16. The European benchmark crude was at a premium of $1.06 to WTI for the same month.

Iraq plans to increase crude exports to 3.3 million barrels a day this year, including sales from the semi-autonomous Kurdish region in the north, Abdul Mahdi said. The OPEC producer pumped 3.35 million barrels a day in December, according to the oil marketing organization SOMO.

In Saudi Arabia, OPEC’s biggest producer, oil exports rose to a seven-month high in November when it led OPEC to keep the group’s production quota unchanged. Overseas shipments climbed to 7.3 million barrels a day from 6.9 million barrels in October, according to data on the website of the Joint Organisations Data Initiative.

OPEC, which supplies about 40 percent of the world’s crude, maintained its collective quota of 30 million barrels a day at a meeting in November. The 12-member group pumped 30.2 million a day in December, according to estimates compiled by Bloomberg.
Rig Count

U.S. output rose to 9.19 million barrels a day through Jan. 9, the fastest pace in weekly records dating back to January 1983, data from the Energy Information Administration show.

The number of operating oil rigs in the U.S. has declined by 209 since Dec. 5, the steepest six-week drop since Baker Hughes Inc. began tracking the data in July 1987. The count was down 55 in the week ended Jan. 16 to 1,366.

The U.S. oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, which has unlocked supplies from shale formations including the Eagle Ford and Permian in Texas and the Bakken in North Dakota.

The IEA lowered its non-OPEC supply growth estimate by 350,000 barrels a day, the first reduction since the 2015 forecast was introduced in July. Half the cut is from Colombian output while effects on U.S. production are so far “marginal,” the Paris-based group, which advises 29 nations on energy policy, said in its monthly market report on Jan. 16.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editors responsible for this story: Pratish Narayanan at pnarayanan9@bloomberg.net Aaron Clark
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by **Cascadian** Mon Jan 19, 2015 2:11 pm

You can keep trying to pump your way out of this but you are just making things worse for yourself in the end.

Actually, the more you pump the higher the likelihood that some downstream effects might hit that make things very difficult for several of the world's economies. Deflation. Venezuela going bankrupt. Greece dropped from the EU.

Oil Declines as Iraq Pumps Crude at Record Pace Amid Supply Glut

Oil Declines as Iraq Pumps Crude at Record Pace Amid Supply Glut

Re: Oil Declines as Iraq Pumps Crude at Record Pace Amid Supply Glut