OPEC April Crude Output Falls to Three-Year Low in Survey

Apr 30, 2014 3:07 pm ET

(Updates prices in fourth paragraph.)

April 30 (Bloomberg) -- OPEC crude production dropped to the lowest level in almost three years in April, led by declines in Saudi Arabian and Iraqi output, a Bloomberg survey showed.

Production by the 12-member Organization of Petroleum Exporting Countries slipped by 302,000 barrels a day to an average 29.863 million, the lowest level since June 2011, according to the survey of oil companies, producers and analysts. Last month’s total was revised 128,000 barrels a day lower to 30.165 million because of changes to the Saudi Arabian, Iranian and Ecuadorean estimates.

Members of the group have had to reduce production because of unplanned and planned maintenance to pipelines, fields and refineries. OPEC is also seeing demand for its crudes drop as U.S. output surges.

Brent crude for May settlement slipped 91 cents, or 0.8 percent, to close at $108.07 a barrel on the London-based ICE Futures Europe exchange. Brent is the benchmark grade for more than half the world’s oil. West Texas Intermediate oil for May delivery fell $1.54, or 1.5 percent, to settle at $99.74 a barrel on the New York Mercantile Exchange. It was the lowest close since April 2.

“Brent has to stay above $100 a barrel to support the economies of the Middle East,” said Adam Wise, who helps run a $6 billion oil and gas bond portfolio as a managing director at Manulife Asset Management in Boston. “We’re in the midst of a transformation of the U.S. oil industry and Middle East countries are pondering how to respond. The Saudis could be reducing production to keep prices resilient.”

U.S. Supply

U.S. crude output rose to 8.36 million barrels a day in the week ended April 18, the most since 1988, Energy Information Administration data shows. Production fell to 8.35 million last week. Stockpiles climbed to 399.4 million barrels last week, the highest since the EIA began reporting weekly data in 1982 and supplies in the Gulf Coast, known as PADD 3, rose to the highest level since the government data for the region started in 1990.

Saudi Arabia, OPEC’s biggest producer, reduced output by 100,000 barrels a day to 9.5 million, the least since June. The desert kingdom pumped 10 million barrels a day in September, the most in monthly data going back to 1989.

The country decreased production because of less demand for domestic power generation and refineries. Saudi Arabian Oil Co. halted operations at the Riyadh oil refinery on April 15 for maintenance and will be idled for 45 days, Aramco said in an e- mailed statement. The plant can process 124,000 barrels of crude a day, according to the company website.

Saudi Policy

“The Saudis are keeping their eye on the global supply picture,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “They may have to dial back further, especially if the glut on the U.S. Gulf Coast grows. The Saudis will do what has to be done to support prices.”

Iraqi production dropped 100,000 barrels a day to 3.25 million this month, according to the survey. Iraq is the second- biggest producer in the group. A pipeline linking Iraqi oil fields to the port of Ceyhan in Turkey has been shut this month because of attacks.

Libyan output dropped by 35,000 barrels a day to 215,000 this month, the third straight decline. It produced 210,000 barrels a day in November and December, the lowest level since September 2011. 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 Output

Iranian production slipped 25,000 barrels a day to 2.84 million in April, according to the survey. The country pumped 2.865 million barrels a day in March, the highest level since July 2012, when new sanctions were imposed on the Islamic republic. Iran, the group’s second-biggest producer in June 2012, is now in fourth place.

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.

Crude production in the United Arab Emirates climbed by 50,000 barrels a day to 2.75 million this month. There were incremental gains in output at new fields and exports rose slightly. The UAE posted the biggest output increase this month.

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 Nayla Razzouk and Ladane Nasseri in Dubai, Colin McClelland in Luanda, Wael Mahdi in Manama, Pietro D. Pitts in Caracas, Nathan Gill in Quito, Ola Galal in Cairo, Fiona MacDonald in Kuwait and Robert Tuttle in Doha.