March 26 (Bloomberg) -- Saudi Arabia is shipping less oil to customers. OPEC by February reduced daily output by 1 million barrels. Global inventories this year fell the most in a decade.

Credit Ali al-Naimi, oil minister of Saudi Arabia, the world's largest exporter, who told OPEC members that production cuts would stop a six-month decline in oil. Crude this year rebounded 26 percent from a 20-month low to $62.81 a barrel.

``We are happy with the level of compliance,'' Mohamed al- Hamli, president of the Organization of Petroleum Exporting Countries, said in an interview in Bangkok on March 22.

OPEC's unity may keep oil from dropping below $50 a barrel for years to come, energy experts say. While global demand, supply disruptions in Nigeria and concern about a conflict with Iran contribute to higher energy costs, the 12-nation consortium's decision to pump less oil underpins crude prices.

``They've learned their lessons,'' said Daniel Yergin, author of the Pulitzer-winning history of the oil industry, ``The Prize: The Epic Quest for Oil, Money & Power.'' ``They like this band from $50 to $60 and they prefer the upper part of the band rather than the lower part,'' he said in a March 22 interview in Washington. ``They've been pretty effective.''

OPEC, producer of 41 percent of global crude supplies, is generating record revenue, easing disputes among members about production quotas. Revenue was $661 billion last year, up from $554 billion in 2004, according to estimates by the Centre for Global Energy Studies, founded by Sheikh Ahmad Zaki Yamani, the former Saudi oil minister.

In a sign of the group's growing cooperation, they decided at their March 15 meeting in Vienna to wait six months for their next conference. Last year oil ministers met about every two months to debate production quotas.

Old Disagreements

A decade ago, OPEC members bickered about who should cut output as oil slid close to $10 a barrel. At a meeting in Jakarta in November 1997, they raised quotas, ignoring the Asian financial crisis that slowed the economy and cut oil demand.

By Dec. 21, 1998, oil was at a 12-year low of $10.35 after Iran refused to implement a production cut to protest Saudi Arabia's decision to boost output after the 1991 Gulf War.

This year's cohesiveness comes from ``team play and being able to gain the confidence of one's colleagues,'' Nigerian Oil Minister Edmund Daukoru said March 22 in Abuja, Nigeria. The group is solving ``long-standing problems,'' said Daukoru, who held the rotating OPEC presidency last year.

Saudi Arabia's Al-Naimi, appointed last week by King Abdullah bin Abdel Aziz al-Saud to a fourth four-year term as oil minister, enforces policies to keep control of the market, oil analysts say.

Al-Naimi `Succeeded'

When OPEC gathered in Doha, Qatar in October to discuss its policy response to a plunge in oil, al-Naimi said as soon as he arrived that the group would ``absolutely'' cut daily output by 1 million barrels. The next day they agreed to a reduction of 1.2 million barrels.

OPEC in December said another 500,000 barrels would be kept from the market. The group's daily output fell by about 1 million barrels from October to February, according to Bloomberg data.

Al-Naimi said at a conference in New Delhi on Jan. 16 that the market was back ``in balance'' and expressed confidence prices would rebound. ``It's going to be a very strong market,'' he told reporters. ``I believe we have succeeded very well. Inventories have come down.''

Prices touched their low two days later and have been rallying since. Benchmark New York Mercantile Exchange crude oil futures have averaged $57.76 so far this year, triple the average price through the 1990s.

Crude oil for May delivery climbed as much as 68 cents, or 1.1 percent, to $62.96 a barrel in after-hours electronic trading on Nymex. It was at $62.81 at 10:30 a.m. in Singapore.

OPEC's Growth

``OPEC has kept enough oil off the market to get rid of excess inventories and send prices higher,'' said Adam Sieminski, chief energy economist at Deutsche Bank AG in New York. ``They've done a good job of sticking to their quotas.''

Angola, the fastest-growing crude producer in Africa, this year became the cartel's newest member. The other 11 joined between 1960, when OPEC was founded, and 1971. Angola produces about 1.5 million barrels a day, putting it ahead of OPEC members Algeria, Qatar and Indonesia. Projects such as Exxon Mobil Corp.'s $3.5 billion Kizomba B, 230 miles off the coast, helped the country double its crude output since 2001.

Ecuador, which joined OPEC in 1973 and quit the group in 1992, may return. Ecuadorian President Rafael Correa said on March 14 that his country would apply for entry.

`Market Power'

``The more members OPEC has, the more market power they will have,'' said Sarah Emerson, managing director of Energy Security Analysis Inc., a consulting firm in Wakefield, Massachusetts. ``Angola has had a dramatic uptick in production,'' she said. ``At some point the addition of Angola will give them greater power over the market.''

The group's members include Iran, the second-biggest producer after Saudi Arabia, the United Arab Emirates, Iraq, Venezuela, Nigeria, Libya and Kuwait. OPEC member states have three-quarters of the world's oil reserves.

OPEC's clout is increased by shrinking production from non- OPEC nations such as Mexico and Norway. Output from Mexico's Cantarell field, the largest in the Western Hemisphere, was 25 percent lower in December than it was in January 2006, government data show. Petroleos Mexicanos, the third-largest oil supplier to the U.S., says output will slide further this year.

Oil production in Norway is forecast to drop 5.6 percent this year, according to the nation's petroleum directorate, after sliding 7.8 percent in 2006. Exports from Norway peaked in 2001.

Demand Increases

Demand is rising as the world economy is forecast to grow 5 percent this year, capping the biggest five-year expansion in three decades, the International Monetary Fund said Jan. 16. China, the fastest-growing major economy, has more than doubled oil imports in a decade, boosting purchases 14.5 percent last year even as prices averaged a record $66.27.

``It's still a relatively tight market,'' said Yergin, who is chairman of Cambridge Energy Research Associates, a consulting firm in Cambridge, Massachusetts. ``It's easier to implement production cutbacks in a tight market.''

Crude oil inventories worldwide fell by more than 50 million barrels from October to January, according to a March 13 report from the Paris-based International Energy Agency, which tracks stockpiles in Europe, North America, Japan, Korea, Australia and New Zealand. The pace of the decline, based on January numbers and preliminary February data, was likely to be the steepest first-quarter decline in a decade, the agency said.

Saudi Cuts

Al-Naimi said in January that he expected the data to eventually show that inventories had dropped by 100 million barrels, which was his goal in October.

Saudi Arabia is continuing to limit its output. Saudi Aramco, the state oil company, will cut supplies to Asian and European refiners next month, with Asian buyers getting an average 9 percent less than contracted volumes, refinery officials who received notices from the company said March 12.

Eventually, OPEC's ability to keep prices high may disappear, according to Yamani, the former oil minister who led OPEC at the time of the Arab oil embargo in 1973.

``It's encouraging alternative sources of energy, encouraging conservation and exploration in other areas, and OPEC will pay the price for that, but not immediately,'' Yamani said in London March 21.

Some oil analysts say OPEC is stronger than ever.

``In January, it looked like oil was in free fall,'' said Bill O'Grady, director of fundamental futures research at A.G. Edwards & Sons in St. Louis. OPEC members ``have shown enough discipline to put a floor under prices.''

To contact the reporters on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net; Mark Shenk in New York at meshenk1@bloomberg.net.

Last Updated: March 26, 2007 04:55 EDT