OPEC Output Down as Libyan Loss Tops Saudi Gain, Survey Shows
March 31 (Bloomberg) -- Kathryn Rooney Vera, emerging markets analyst and senior macro economist at Bulltick Capital Markets, talks about the oil market and the impact of rising oil prices on Latin America. Vera speaks with Lisa Murphy on Bloomberg Television's "Fast Forward." (Source: Bloomberg)
The Organization of Petroleum Exporting Countries’ crude output dropped in March as increases from Saudi Arabia failed to make up for a decline in Libyan production to a 49-year low, a Bloomberg News survey showed.
Production slipped 363,000 barrels, or 1.2 percent, to an average 29.022 million barrels a day, the lowest level since September, according to the survey of oil companies, producers and analysts. Daily output by members with quotas, all except Iraq, decreased 353,000 barrels to 26.437 million, 1.592 million above their target.
Crude oil for May delivery rose $2.45, or 2.4 percent, to $106.72 a barrel on the New York Mercantile Exchange, the highest settlement since Sept. 26, 2008. Brent oil for May settlement climbed $2.23, or 1.9 percent, to $117.36 a barrel on the London-based ICE Futures Europe exchange. The European benchmark reached $119.79 on Feb. 24, the highest intraday price since Aug. 22, 2008.
“The numbers show that it will take a while before the Saudis and others make up for Libya’s missing barrels,” said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “We should see the total rise in April. This explains why Brent is above $115.”
Saudi Arabia, OPEC’s biggest producer, increased output by 300,000 barrels, or 3.4 percent, to 9 million barrels a day in March, the highest level since October 2008. The kingdom exceeded its quota by 949,000 barrels.
Saudi Arabia’s Offer
Saudi Arabian Oil Co. Chief Executive Officer Khalid Al- Falih said last month that the kingdom is “ready to supply incremental change in demand,” to cover any shortfall from Libya. Oil Minister Ali al-Naimi announced March 8 that Saudi Arabia had developed two light, low-sulfur blends that are closer to the specifications of oil normally supplied by Libya.
The desert kingdom has about 3.5 million barrels of spare daily production capacity, al-Naimi said this month. The country could increase output by 2.5 million barrels within 30 days, according to data compiled by Bloomberg News.
The United Arab Emirates bolstered output by 160,000 barrels to 2.51 million barrels a day, the second-biggest increase this month. The country was OPEC’s fourth-largest producer in March.
Middle East Output
“The countries in the Middle East should do a better job making up for Libya next month,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “April output should be up.”
Angolan production climbed 110,000 barrels a day to 1.75 million. Kuwait increased output 100,000 barrels to 2.405 million. Angola and Kuwait posted the third- and fourth-biggest production gains in OPEC.
“OPEC members stepped in with a sizeable increase from Saudi Arabia, U.A.E., Kuwait and Angola,” Ali Al-Yabhouni, the UAE OPEC governor, said at a conference in Abu Dhabi on March 28. “Even without Libya there is plenty of oil in the market.”
Libyan output fell 995,000 barrels, or 72 percent, to 390,000 barrels a day this month, the survey showed, the lowest amount in yearly data since 1962. On a monthly basis the previous low was 973,000 in December 1987. Monthly data goes back to January 1979.
The North African nation has been convulsed by an uprising against the government of Muammar Qaddafi, who has vowed to crush rebels threatening his 42-year rule.
Libyan Export Halt
Libyan exports may be halted for “many months” because of sanctions and damage to facilities, the International Energy Agency said on March 15.
“The big question now is when Libyan output will return to at least a semblance of normalcy,” Lynch said.
Nigerian production fell 85,000 barrels a day to 1.915 million this month, the second-biggest decline in OPEC. It was the lowest level since November 2009. Attacks by militants in Nigeria’s southern delta, home to the country’s oil and gas industry, have cut output.
To contact the reporters on this story: Mark Shenk and Karyn Peterson in New York at mshenk1@bloomberg.net.
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.
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