"OPEC MAKES 66 PCT OF PLEDGED SUPPLY CUT-REUTERS SURVEY
By Alex Lawler
LONDON, Dec 2 (Reuters) - OPEC oil supply fell in November for a third consecutive month as members began to implement a deal to cut supplies in a bid to stem the slide in oil prices, a Reuters survey showed on Tuesday.
The survey suggests the Organization of the Petroleum Exporting Countries met 66 percent of a pledge to lower output by 1.5 million barrels per day in November -- so far not enough to counter the slump in oil demand as the world economy slows.
"OPEC definitely needs to do more," said Mike Wittner, oil analyst at Societe Generale. "What may look like enough of a cut now may turn out not to be once more data on the economy and oil demand come out. Demand seems to get weaker as we go on."
Supply from OPEC fell to 31.2 million barrels per day in November from 32.17 million bpd in October, according to the survey of oil firms, OPEC officials and analysts.
The 11 members bound by output targets pumped 28.07 million bpd, down from 29.06 million bpd in October. That represents 66 percent compliance with OPEC's pledge to lower supply by 1.5 million bpd from Nov. 1.
Most of the cutback came from OPEC's Gulf members. Top exporter Saudi Arabia reduced output by almost 500,000 bpd, and Kuwait and the United Arab Emirates also curbed supplies.
The reduction from the UAE was partly due to field maintenance, according to officials at state oil company ADNOC, as well as voluntary cutbacks.
Even after the reduction, output remains above the target covering 11 OPEC members of 27.3 million bpd, the survey found.
OPEC, the source of about 40 percent of the world's oil, meets on Dec. 17 in Algeria to consider a further supply cut.
"DISAPPOINTING"
Oil fell after the survey was released as the rate of compliance was less than expected. U.S. crude was down about $1 a barrel at $48.25 as of 1645 GMT, having earlier hit a 3 1/2-year low.
"This lack of compliance is disappointing to the market and puts into doubt OPEC's indications that they will make more production cuts later this month," said Phil Flynn, analyst at Alaron Trading in Chicago.
OPEC officials meeting in Cairo at the weekend had said compliance with the supply curbs was 80 percent or more.
There was little sign of significant cutbacks from Iran and Venezuela, two OPEC members who are often among the first to support measures that will support oil prices.
OPEC at the informal talks in Cairo deferred a decision on whether to reduce supply further amid signs that Saudi Arabia and its Gulf neighbours wanted tighter compliance with the existing supply curbs. Libya barely reduced supply in November and new member Ecuador did not cut production at all, the survey found.
Higher supply elsewhere in the group in partly offset the declines.
Iraqi output rose slightly to 2.28 million bpd due to higher exports from the country's south. But a slowdown in exports towards the end of the month limited the increase."
"OIL WILL FALL FURTHER WITHOUT OPEC ACTION, SAYS BP
By Eduard Gismatullin
Dec. 2 (Bloomberg) -- Oil prices will continue to fall during the next 12 to 18 months if OPEC fails to implement “sufficient cuts” and supply stays at current levels, according to Christof Ruehl, the chief economist of BP Plc.
The world economy will stage a recovery from recession in 18 to 24 months, followed by “possible spikes” in oil prices, Ruehl told a conference in London today.
“Demand is now plunging like a rock,” he said. OPEC, the supplier of about 40 percent of the world’s oil, may cut output once or twice more in an attempt to reverse crude’s 66 percent retreat from July’s record, he said.
The Organization of Petroleum Exporting Countries will reduce crude production when it meets later this month in Algeria, the group’s Secretary General Abdalla el-Badri said yesterday. Concerns that a slowing world economy will hurt demand for fuel has pushed oil prices down to a three-year low.
Crude oil for January delivery fell $1.12, or 2.3 percent, to $48.16 a barrel at 11:43 a.m. on the New York Mercantile Exchange. Futures touched $47.36, the lowest since May 20, 2005.
BP, Europe’s second-largest oil company, has so far stuck to its planned capital expenditure program, Ruehl said. The oil producer may scale back investment in future to maintain its dividend, which “is a priority,” he said.
On Oct. 28, BP reiterated capital spending at around $21 billion to $22 billion for the year.
‘Fair’ Price
Saudi Arabia’s King Abdullah and oil ministers from OPEC members Venezuela, Algeria, Nigeria and Iraq said last week an oil price of $75 a barrel would be a “fair” level that supports investment in new capacity.
BP’s Ruehl disagreed with their views, saying: “There is no fair price. There is a price, which balances demand and supply.”
Most OPEC nations’ economies can sustain current oil prices, apart from three or four nations, Ruehl said. Countries that restricting access to their reserves should allow international oil companies to invest in production projects to meet demand for energy, Ruehl said.
“Most investment could take place in areas, which currently locked for private companies,” Ruehl said. “If the purpose of the fair oil price is to allow investment there are easier ways of doing it, you just open up.”
Oil and gas industry costs are falling because of the drop in commodity prices, Ruehl said. Service and equipment costs are bucking the trend because of contractual obligations.
“We will see costs diminishing as the commodity price cycle is turning,” Ruehl said." |
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