OPEC's Oil Output Edges Higher for 3rd Consecutive Month

DUBAI (Dow Jones Newswires), Jul. 2, 2009

OPEC's crude oil output edged higher for a third consecutive month in June, a survey by Dow Jones Newswires showed Thursday, as members of the Organization of Petroleum Exporting Countries further loosened their grip on production quotas to benefit from higher crude prices.

According to the survey, the group's 11 quota-bound members, excluding Iraq, leaked an additional 125,000 barrels a day to the market in June, an increase of 0.49% to 25.865 million barrels a day against 25.74 million barrels a day in May.

The survey estimates the OPEC-11 last month pumped about 1.02 million barrels a day above their production target of 24.845 million barrels. The group has cut output by a total 3.22 million barrels a day since September, when the first out of three output cuts totaling 4.2 million barrels a day came into effect, indicating a compliance rate of about 76%, lower than the 79% achieved in May, the survey shows.

"This was forthcoming because from the last OPEC meeting the percentage of noncompliance was larger and there were certain countries like Venezuela, Nigeria, Iran and Angola who were not adhering," said Kamel Al Harami, a Kuwait-based independent oil analyst.

The figures indicate that compliance among OPEC members is weakening as producers seek to take advantage of oil prices hovering around the $70-a-barrel mark. Since late last year, crude prices have recovered from levels below $40 a barrel.

"At $70 it was very tempting, and also they had a feeling that as long as Saudi Arabia can make sacrifices and reduce production then why not?" Al Harami said.

The front-month August light, sweet, crude contract on the New York Mercantile Exchange was trading $0.95 lower at $68.36 a barrel at 0948 GMT Thursday.


The survey, which is based on input from oil traders, analysts and industry sources, estimates output by all 12 group members rose by 0.62%, with countries pumping 175,000 barrels a day more at 28.285 million barrels a day in June versus May.

Output rose against the backdrop of major supply disruptions in Nigeria, which saw daily production drop by an estimated 100,000 barrels to 1.71 million, the survey shows. The west African state is still pumping above its quota of 1.673 million barrels a day.

"Continued attacks on oil facilities caused some production capacity to be temporarily shut in," Richard Gorry of Vienna-based JBC Energy said.

The drop in Nigerian production was more than made up for by Venezuela, Iran and Angola, as well as non-quota-bound members Iraq, all of which boosted output last month, the survey shows.

Venezuela's output rose by 110,000 barrels a day to a daily rate of 2.24 million barrels, which is more than 250,000 barrels above target, the survey estimates.

Iran, OPEC's number two producer, pumped an additional 50,000 barrels a day last month at 3.76 million, the survey shows. This is more than 420,000 barrels a day above target.

Angola also boosted output, adding 40,000 barrels a day to produce 1.75 million.

Iraq, the only producer outside OPEC's quota, saw production rise by 50,000 barrels a day to 2.42 million in June, according to the survey

"Production in Iraq continued its upward trend of the last couple of months, due in part to the addition of two new Kurdish greats," Gorry said.

OPEC's top producer, Saudi Arabia, raised output by about 20,000 barrels a day to a daily 7.97 million, which is still below its target of 8.051 million barrels a day, the survey shows.

OPEC, which provides about 40% of the 83 million barrels consumed daily worldwide, will hold its next scheduled meeting in Vienna Sept. 9.

   (in millions of barrels a day) 
   Oil Survey Data 
                  June    May     Apr     Mar      Quota(b) 
   Saudi Arabia   7.970   7.950   7.900   7.900    8.051 
   Iran           3.760   3.710   3.670   3.620    3.336 
   UAE            2.240   2.240   2.220   2.220    2.223 
   Kuwait         2.250   2.240   2.240   2.250    2.222 
   Venezuela      2.240   2.130   2.150   2.150    1.986 
   Nigeria        1.710   1.810   1.860   1.830    1.673 
   Angola         1.750   1.710   1.690   1.650    1.517 
   Libya          1.530   1.540   1.530   1.550    1.469 
   Algeria        1.230   1.220   1.210   1.220    1.202 
   Qatar          0.740   0.740   0.730   0.740    0.731 
   Ecuador        0.445   0.450   0.450   0.465    0.434 
   TOTAL (11)    25.865 25.740 25.650 25.595   24.845 
   Iraq (c)       2.420   2.370   2.321   2.315      n/a 
   TOTAL (12)    28.285 28.110 27.971 27.910      n/a 

a. Dow Jones Newswires assesses OPEC output from data supplied by primary sources, traders and analysts.

b. OPEC at its Dec. 17 meeting in Oran agreed on reducing output by a total of 2.2 million barrels a day from Jan. 1 for the 11 members with a quota, bringing to 4.2 million barrels a day the combined cuts announced since September. OPEC's new oil production targets for individual members were obtained by Dow Jones Newswires from an official OPEC document that was not made public. The new production target excludes Iraq, which isn't part of the quota system.

c. Iraq remains the only country outside the group's quota system.

(R) Revised from previous month.

n/a Not applicable

(Tahani Karrar in Dubai and Spencer Swartz in London contributed to this article.)  


Copyright (c) 2009 Dow Jones & Company, Inc.


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