OPEC crude oil production drops 70,000 barrels per day

As WTI nears $90, and Brent’s already there, consumers did not need this: OPEC cut its output last month.

According to the Platts’ survey, OPEC cut its output just as demand is showing significant signs of growth around the world, pumping out 29.1 million b/d in November, That’s down 70,000 b/d from a month earlier, during the quarter where demand is the heaviest and the inventory draw the most significant.

That decline puts OPEC output at less than the full-year 2011 call on OPEC crude estimated by the International Energy Agency.

But on a more specific date range, OPEC output at 29.1 million b/d is at or less than the projected IEA call for the next five quarters: 29.6 million b/d in this quarter; 29.1 in Q1 2011; 29.3 in Q2; 30 in Q3; and 29.1 in the fourth quarter of next year.

Crude oil production from the 12-member Organization of the Petroleum Exporting Countries (OPEC) averaged 29.1 million barrels per day (b/d) in November, a drop of 70,000 b/d from October levels, a just-released Platts survey of OPEC and oil industry officials and analysts showed.

“These numbers are a shocker,” said John Kingston, Platts global director of news. “In the fourth quarter, the world traditionally draws inventories, and the rate of inventory decline is going to be accelerated by this unexpected decline from OPEC. This output decline is not coming as a result of any sign of a decline in demand, so it’s fair to say that Platts’ survey estimates this month is one of the most bullish we’ve reported in a long time.”

Excluding Iraq, which does not participate in OPEC production pacts, the 11 members bound by quotas (OPEC-11) pumped an average 26.7 million b/d in November, 80,000 b/d below October levels but 1.855 million b/d above their 24.845 million b/d target, the survey showed.

Angola, Nigeria, Saudi Arabia, the United Arab Emirates (UAE) and Venezuela saw output decreases totalling 90,000 b/d. This volume was partially offset by a 10,000 b/d increase from Libya.

Nigeria’s Bonny Light crude for loading in December and January will be affected by a force majeure declared by Royal Dutch Shell on November 19 after a pipeline leak.

OPEC ministers will meet on December 11 in Quito, Ecuador, which currently holds the presidency of the oil producer group. They are not expected to make any changes to the existing agreement, which has been in place for almost two years.

Libya’s de facto oil minister, National Oil Corporation chief Shokri Ghanem, said earlier this week that the Quito meeting would review market conditions and discuss compliance with existing production targets.

“All that I expect is that there will be a call for compliance. We are not going to do anything,” he told reporters in Doha, Qatar, where he was attending a meeting of gas exporting countries.

The latest Platts estimates suggest a compliance level of 55.8% in November with the 4.2 million b/d of cuts agreed in late 2008.

Ghanem described the higher international crude prices currently prevailing as “kind of compensation for the loss in the value of the dollar and the increase in the prices of other commodities, specially food.”

Algerian oil minister Youcef Yousfi, also in Doha, said prices were “satisfactory” and that he believed oil markets would remain stable for the next few months.

Brent crude futures for January hovered above the $90-per-barrel (/b) level in early afternoon trading in Europe Friday, December 3, at one point trading at $91.13/b. Traders cited stronger investor confidence in equities and commodities and also physical crude oil demand in Northwest Europe as the key drivers behind the higher prices.

OPEC does not have an official price target but has informally embraced a range of $70-$80/b, the band preferred by Saudi Arabia.

For production numbers by country, view this table.

PLATTS