OPEC January Crude Output Declines to Two-Year Low in Survey

Jan 30, 2014 4:06 pm ET

(Updates prices in fourth paragraph, comments beginning in seventh and output in 11th.)

Jan. 30 (Bloomberg) -- OPEC crude production dropped to the lowest level in more than two years in January, led by a decline in Angola, a Bloomberg survey showed.

Output by the 12-member Organization of Petroleum Exporting Countries decreased 151,000 barrels a day to an average 29.888 million from 30.039 million in December, the survey of oil companies, producers and analysts showed. It was the least since June 2011. The December total was revised 84,000 barrels a day higher because of changes to the Saudi Arabian, Kuwaiti and Iraqi estimates.

“The production changes are mostly noise,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “The biggest changes were to temporary issues that should soon be resolved. It shows that OPEC’s members don’t see a problem with prices.”

Brent crude for March settlement rose 10 cents to close at $107.95 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 March delivery climbed 87 cents, or 0.9 percent, to settle at $98.23 a barrel on the New York Mercantile Exchange. The U.S. benchmark grade ended the session at the highest level since Dec. 31.

Angolan crude production tumbled by 258,000 barrels a day to 1.48 million this month, the least since the country joined OPEC in January 2007. Output declined because of maintenance at the Plutonio offshore field operated by BP Plc.

Saudi Output

Saudi Arabia, the group’s biggest producer, curbed output by 100,000 barrels a day to 9.7 million. The desert kingdom pumped 10 million barrels a day in September, the most in monthly data going back to 1989.

“All of the forecasts show that Saudi Arabia will have to cut production later this year,” said Julius Walker, global energy markets strategist at UBS Securities LLC in New York. “The Saudis may be adjusting production for that reason.”

Iraqi production dropped 50,000 barrels a day to 3.05 million this month, the third biggest decline in OPEC, according to the survey. Iraq is the second-biggest producer in the group after Saudi Arabia.

Libyan output rose by 260,000 barrels a day to 470,000 in January, the first increase since March. It pumped 210,000 barrels a day in November and December, the lowest level since September 2011.

Libyan Unrest

The North African country’s crude output, curbed by political protests and the seizure of ports by rebels, has recovered following the restart of the Sharara field this month. 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.

Iranian production rose 20,000 barrels a day to 2.7 million in January, the most since March, according to the survey. It was the second-biggest gain this month. Iran, the group’s second-biggest producer in June 2012, is now in fifth place.

“It’s not unrealistic to see Libyan production recover in the months ahead, a rebound in output in Iran and South Sudan, along with continuing gains in the U.S.,” Walker said. “This would put a lot of downward pressure on the market.”

Sanctions aimed at stopping Iran’s nuclear program have hindered the Islamic republic’s ability to export crude oil. The U.S. and its allies agreed on Nov. 24 to temporarily ease some of the restraints. Iran started curbing its nuclear activities on Jan. 20 in line with the interim accord.

“The Saudis are probably concerned about the looming return of Iranian barrels,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “They will have to cut back output if there’s an accord reached about Iran’s nuclear program.”

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.

--With assistance from Wael Mahdi in Manama, Nayla Razzouk, Ladane Nasseri and Maher Chmaytelli in Dubai, Fiona MacDonald in Kuwait, Colin McClelland in Luanda, Nathan Gill in Quito and Robert Tuttle in Doha. Editors: Richard Stubbe, Charlotte Porter