1) OPEC production increased in November to 34.19 MMBbl/d from 33.82 MMBbl/d in October according to a Reuter’s survey. If the increase is confirmed by official OPEC and IEA releases, the OPEC production target of 32.5 MMBbl/d will become harder to attain as the size of the cuts must be larger.
2) Libya and Nigeria were exempt from the quotas and they each have significant offline production (compared to recent and historical levels) that could come back on line. Increases from either country will depend on their ability to maintain political stability, and avoid terror attacks on key crude production and export infrastructure. Nigeria has already said they hope to boost production by 200 MBbl/d in January.
3) Regardless of the quota news, Saudi Arabia continues to fight for market share as Aramco cut their selling price to Asia for January. It remains to be seen if the focus will shift to Asian market share in lieu of exports to the US (given the recent increased exports from Russia to China), or if Saudi Arabia will pursue both markets.
4) Baker Hughes reported a large rise in the rig count as 27 rigs were added. The rise shows the flexibility of shale producers to make moves when prices permit, but the production associated with the higher rig count will come with a lag.
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