Saudi Arabia's oil output hit an all-time high in July, according to OPEC data published Wednesday, feeding a glut that has oil prices in a two-year slump. The world's largest oil exporter told the Organization of the Petroleum Exporting Countries it pumped 10.67 million barrels a day last month. While Saudi output typically peaks in summer, the record output also reflects the country's ongoing strategy of keeping its production high despite plummeting prices. Since 2014, Saudi Arabia has resisted pressure from other producers to cut production, betting that the low oil prices will force other exporters, such as the US, to cut their output. Saudi production in July rose by 30,100 barrels a day from a year earlier, OPEC said in its monthly report Wednesday, citing secondary sources such as shippers, analysts and industry executives. Its previous production high was 10.56 million barrels a day in June 2015. Oil prices rose as much as 1 percent on Wednesday in anticipation the US government would report a weekly drop in crude and gasoline stockpiles, tempering glut worries heightened by Saudi Arabia's record high oil output. Analysts expect the US Energy Information Administration (EIA) to cite a drawdown of about 1 million barrels each in both domestic crude and gasoline inventories for the week ended Aug 5 in data due at 10:30 a.m. EDT (1430 GMT). The American Petroleum Institute (API), a trade group, issued its own inventory data on Tuesday that showed a build of 2.1 million barrels instead in crude. But it also reported a drop of 3.9 million barrels in gasoline, much larger than analysts had forecast. The API's numbers are based on voluntary reporting by its members and represent a smaller sampling than the EIA data. US West Texas Intermediate (WTI) crude futures CLc1 were up 25 cents, or 0.6 percent, at $43.02 per barrel by 9:54 a.m. EDT (1354 GMT). It fell as much 69 cents earlier in the session on concerns about Saudi crude production in July. Brent crude futures LCOc1 rose 36 cents, or nearly 1 percent, to $45.34. But compared with a year earlier, July demand in the kingdom fell by 220,000 barrels a day, or 8%, to 2.76 million barrels a day, because of natural gas production that Saudi Arabia brought on stream this year, OPEC said. July's record pumping shows how Saudi Arabia continues to compete for its share of the export market with rivals including the US, Russia and a resurgent Iran, which has been boosting production after the end of Western sanctions earlier this year. OPEC President Mohammed bin Saleh Al-Sada, the Qatari energy minister, said this week that the organization would hold talks next month, and that members often discuss ways of stabilizing the market. An agreement among OPEC producers to cap or reduce production could boost oil prices, which have entered a new slump after rallying earlier this year. So far, the big producers have been unwilling to limit production. But that dynamic could be shifting now that low oil prices are affecting the countries' economies. Iran, which is nearing production levels that approach pre-sanction level of 4 million barrels a day, will likely require a long period of new investment to further boost production. Saudi Arabia would like to see higher prices ahead of a planned public offering of stock in its state-owned oil company. So neither side would likely be giving up much were it to agree to freeze production to try to boost prices. Saudi Arabia has long said it would consider a freeze if Iran were to participate. "It almost seems like the stars are aligning for some sort of Iranian-Saudi cooperation," said Jim Krane, a fellow at Rice University's Baker Institute. "Their interests are converging." Still, he said, any cooperation between the two would almost certainly be temporary. Aside from their broader power struggle in the region, each seems committed over the longer term to expanding production and trying to maintain or boost market share, he said. OPEC, which controls more than a third of the world's oil supply, said its July crude production was up by 46,000 barrels a day from June, to 33.11 million barrels, on higher output from Iraq and Saudi Arabia. The organization has 14 members after adding Gabon in June. The organization bumped up its forecast for oil demand growth in 2016 to 1.22 million barrels a day, about 30,000 barrels a day higher than last month. OPEC predicted 2017 world-wide oil demand would grow by 1.15 million barrels a day, unchanged from July's report. Non-OPEC oil supply will contract by 79,000 barrels a day this year, the cartel said, an upward revision of 90,000 barrels a day reflecting higher-than-expected output in the second quarter from the U.S. and U.K. In 2017, non-OPEC supply will decline by 150,000 barrels a day, OPEC said, following a downward revision of 40,000 barrels from last month. OPEC said it expected demand for its crude oil this year to reach 31.9 million barrels a day. For 2017, it forecast OPEC crude demand to be 33 million barrels a day.
