The 10 members of the Organization of Petroleum Exporting Countries (OPEC) bound by the group's output agreements produced an average 26.57 million barrels of crude oil per day in April, a Platts survey showed May 10. This is up 30,000 barrels per day (b/d) from March's 26.54 million b/d and 770,000 b/d above their 25.8 million b/d production target established last month.

"But these numbers have to be viewed as worrisome for consumers," said John Kingston, Platts global director of oil. "Although the International Energy Agency (IEA) projects that OPEC only needs to supply the market with 29.3 million b/d in the second quarter to keep inventories balanced, from a full-year perspective it must supply about 30.4 million b/d," he explained, with the heaviest supply needs coming in the third and fourth quarters respectively, of 30.5 million b/d and more than 31 million p/d.

"So OPEC has to add a significant amount of supply in the market, just to keep inventories from declining further later this year," Kingston said. "And those estimates don't include any extra surge of OPEC oil that would be needed should the US Gulf of Mexico get hit by a significant hurricane in the coming months."

Total production from all 12 members, including Iraq which does not participate in OPEC output pacts and Angola which joined the group at the beginning of this year, rose by 80,000 b/d to 30.19 million b/d, the survey estimated.

Small drops in output from Indonesia and Venezuela totaling 20,000 b/d were more than offset by increases totaling 100,000 b/d from Nigeria, Iraq and Angola, the survey showed.

OPEC ministers agreed last October to remove 1.2 million b/d of crude from world oil markets from November 2006, saying supply was well in excess of demand and setting a production target of 26.3 million b/d. In December, they agreed to expand the cut by 500,000 b/d from February. The cuts were based on estimated September production of 27.5 million b/d.

Although OPEC compliance with its 1.7 million b/d total cut has fallen well short of 100%, world crude benchmarks have been holding above $60/barrel. The latest Platts survey shows that the OPEC-10 have cut supply by some 1.24 million b/d since September, when Platts estimates pegged production at 27.81 million b/d.