Baku, Azerbaijan, April 20
By Aygun Badalova - Trend:
Oil production by Saudi Arabia, which is the largest OPEC member producer, will further increase from the current levels during summer, analysts of the US JP Morgan bank believe.
In a weekly oil market report, obtained by Trend, analysts mentioned that Saudi Arabia oil production was 10.3 million barrels per day (bpd) in March 2015. IEA monthly oil market report puts it at 10.1 million bpd, with OPEC total production at 31 million bpd in March 2015, up 0.9 million mom (Month-over-Month).
"A sustainable rise in refinery margins during February and March supporting crude demand at the time was likely met through higher crude exports from OPEC, the report said.
However, it is noteworthy that Brent crude prices fell from near $63 per barrel in end-February to $55 per barrel at the end of March."
The latest OPEC Monthly Oil Market Report stated that, according to both primary and secondary sources, OPEC production rose sharply in March compared to the previous month.
The Cartel's production increased in March by 810,000 barrels per day (bpd) to 30.79 million bpd, according to the report.
Crude oil output increased mostly from Saudi Arabia and Iraq, while Libya saw a return of about 165,000 barrels a day from shut-in wells in active oil fields.
Following the release of OPEC data, the prices for Brent crude fell by $1 to $62.98 per barrel. WTI price was down by $0.81 to $55.9 per barrel.
JP Morgan's analysts believe that Saudi Arabia's production increase was in line with crude demand from consumers.
"April and May official selling price (OSP) differentials were increased following the strength in refinery margins, signaling that the moves are in line with market conditions. However, it seems likely that with domestic refineries ramping up and summer crude oil burn season ahead, Saudi Arabian production increases further from current levels during the summer," analysts said.
Analysts said that within their fundamental projections, given that Saudi Arabia production has exceeded expectations and not pressured prices to any great extent again raises the possibility that the market has coped with increased supply volumes which could be interpreted as indicative of stronger than expected demand.
Analysts forecast oil prices in 2015 and 2016 to be around the current levels with Brent average at $59.3 and $61.8 per barrels and WTI at $51.8 and $53.8 per barrel this and year respectively.
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