Rising crude-oil output from OPEC is fanning concern among producers that an already big overhang in crude inventory will continue to swell as peak-summer gasoline demand ends, driving oil prices lower.

Data released Tuesday by the Organization of Petroleum Exporting Countries showed output from the group’s 11 members bound by production quotas rose by 105,000 barrels a day last month despite the group keeping in place formal production cuts announced late last year. It was the fourth consecutive month of increased output. Since April, output is up 420,000 barrels a day, or almost 2%.
Adding to the OPEC crude hitting the market, Iraq is pumping 6% more oil since April and the country’s exports in July rose to a little more than two million barrels a day, the highest level since the U.S.-led invasion in 2003. Iraq is the only member of OPEC, which pumps about four in 10 barrels consumed globally, that doesn’t have a production quota, as it rebuilds from the war.
OPEC officials aren’t happy about the oversupply but are, so far, fairly relaxed about the situation because crude prices, up recently on rising stock markets and optimism about economic recovery in emerging markets, are trading near $70 a barrel.
“The real worry is the inventory situation....There is an astonishing amount of oil in storage that will take a long time to drain given the weak (global) demand,” said Richard Gorry, an analyst in Vienna at JBC Energy.
OPEC is to meet Sept. 9 in Vienna to review its output policy.
(Source: The WSJ)