Saudi Arabia Stabilizes Oil Output as OPEC Maintain CapWael Mahdi
Saudi Arabia kept production near 9 million barrels for a second month, according to a Gulf official with knowledge of the country’s oil policy, helping to maintain OPEC output at close to the group’s official ceiling.
The world’s largest crude exporter produced 9.05 million barrels a day in January, little changed from December when output reached the lowest in 20 months, the Persian Gulf official said on condition of anonymity. Brent futures rose today to $117.83 a barrel, the highest level in four months.
The kingdom, while keeping its production stable, supplied 9.26 million barrels a day to the market, compared with 9.15 million the previous month, he said. The difference of 210,000 barrels between supply to market in January and production figures is made up for by deliveries from inventories, he said.
The Organization of Petroleum Exporting Countries trimmed output by 465,000 barrels a day in December to 30.4 million as budget wrangles in the U.S., speculation about stimulus measures in Japan and Europe’s struggle to boost growth clouded the outlook for fuel demand. Cuts were led by a reduction in Saudi Arabia, the group said last month in its monthly report, citing secondary sources. That’s 800,000 a day more than the 29.6 million the group estimates it will need to provide this year.
Saudi Arabia started producing at about 9 million barrels a day in December after pumping at 9.9 million for most of the second half of 2012, according to data compiled by Bloomberg. Output reached 10.1 million barrels in April and again in June, the highest in three decades, according to data the government submitted to Joint Organization Data Initiatives.
The drop in production reflects lower seasonal demand within Saudi Arabia as well as an intention to prevent surplus stockpiles accumulating, said Amrita Sen, chief oil market strategist at Energy Aspects Ltd. in London. Production will probably rebound following a cut in the country’s official selling prices for March deliveries, she said.
Saudi Arabian Oil Co. cut differentials used in determining official selling prices for all of its grades to customers in Asia for March, the state-owned producer said yesterday.
The desert kingdom denied last month what it said were suggestions that it cut oil production in December to push crude prices higher and attributed the reduction to weaker demand, according to Ibrahim Al-Muhanna, an adviser to Oil Minister Ali al-Naimi.
Consumption dropped in Saudi Arabia in the fourth quarter of last year after peaking in the summer, Muhanna said. Overseas demand for Saudi crude also fell, because of slower growth in the euro area and concerns about budgetary challenges in the U.S., he said.
OPEC’s 12 members agreed to a collective output target of 30 million barrels a day in December 2011. The group will next meet in May.