Feb. 27 (Bloomberg) -- OPEC crude production dropped to the lowest level in more than two years in February, led by declines in Libyan and Saudi Arabian output, a Bloomberg survey showed.
Production by the 12-member Organization of Petroleum Exporting Countries decreased 11,000 barrels a day to an average 29.877 million from 29.888 million in January, the survey of oil companies, producers and analysts showed. It was the least since June 2011. Last month’s total was unrevised.
“Prices are at a good level for members where they can make enough money by pumping at a steady level,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.4 billion. “It appears that the Saudis have a price in mind and it’s about where Brent is now. They are quietly playing their traditional role of swing producer.”
Brent crude for April settlement slipped 56 cents, or 0.5 percent, to close at $108.96 a barrel on the London-based ICE Futures Europe exchange today. Brent is the benchmark grade for more than half the world’s oil. West Texas Intermediate oil for April delivery fell 19 cents to settle at $102.40 a barrel on the New York Mercantile Exchange.
The U.S. benchmark oil is up 5 percent this month and Brent is 2.4 percent higher. WTI has advanced more than Brent as winter storms bolstered U.S. heating-fuel use and crude supplies at Cushing, Oklahoma, the delivery point for futures traded in New York fell. Cushing inventories at the hub decreased by 1.08 million barrels to 34.8 million last week, the fewest in four months, the Energy Information Administration said yesterday.
“OPEC is very comfortable with prices at this level,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “They are probably very happy that WTI rose to be closer to Brent levels and not the other way around.”
Libyan output dropped by 120,000 barrels a day to 350,000 in February, the ninth decline in 11 months. The country pumped 210,000 barrels a day in November and December, the lowest level since September 2011.
The North African country’s crude output has tumbled because of political protests and the seizure of ports by rebels. Libya pumped 1.59 million in January 2011 before the uprising that led to former leader Muammar Qaddafi’s ouster and subsequent killing that year.
Saudi Arabia, the group’s biggest producer, curbed output by 110,000 barrels a day to 9.59 million. The desert kingdom pumped 10 million barrels a day in September, the most in monthly data going back to 1989.
The country reduced output because of less demand from world refineries, which are performing maintenance after peak heating-fuel use, and refinery and field work in Saudi Arabia.
“The Saudis are looking at less demand because of the time of year and have probably decided to just reduce production a bit,” Lynch said.
The Yanbu oil refinery halted operations on Feb. 1 for maintenance and will be idled for 30 to 45 days, according to information from two people with direct knowledge of plant’s operations, who asked not to be identified because information is private. The facility processes about 240,000 barrels of crude a day, according to data compiled by Bloomberg.
Saudi Arabian Oil Co. started shutting down the southern Shaybah oil field as work starts to increase output capacity. Aramco plans to bolster Shaybah’s production to 1 million barrels a day from 750,000, with the completion of the expansion scheduled for April 2016.
Crude production in the United Arab Emirates also declined by 40,000 barrels a day this month as refinery maintenance in Asia reduced demand for barrels. Output was at the lowest level since March 2013.
The biggest production gains were in OPEC’s two West African members, Angola and Nigeria. Angolan output rose by 207,000 barrels a day to 1.687 million this month. It was the country’s biggest gain since August 2012. Output tumbled 258,000 barrels a day to 1.48 million in January, the least since Angola joined OPEC in 2007, because of maintenance at the Plutonio offshore field operated by BP Plc.
Nigeria’s crude production increased by 72,000 barrels a day to 1.997 million in February, the survey showed. Output is often disrupted by unrest and theft in the Niger River delta, the country’s main oil-producing region.
OPEC ministers kept their output target unchanged at 30 million barrels a day on Dec. 4. The group will next meet on June 11 at its headquarters in Vienna.
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