OPEC-10 output dips to 25.63 MMBPD in November: Survey

OPEC's eleven members, including Iraq, pumped an average 27.52 million barrels per day (MMBPD) in November, a shade higher than October's 27.51 MMBPD, a Platts survey of OPEC and oil industry officials reported on Tuesday.

Excluding Iraq, the ten members with quotas managed to reduce their combined output by 180,000 BPD, producing an average 25.63 MMBPD in November against October's 25.81 MMBPD. But they overshot their new 24.5 MMBPD ceiling, which came into effect at the beginning of November, to the tune of 1.13 MMBPD.

The biggest single reduction--120,000 BPD--came from Saudi Arabia, which produced 8.31 MMBPD in November against 8.43 MMBPD in October, the survey showed.

Other smaller cuts ranging from 10,000 BPD to 60,000 BPD came from Kuwait, Libya, the UAE and Venezuela. These cuts, totaling 230,000 BPD, were more than offset, however, by increases totaling 240,000 BPD. Iraq, which boosted its production by 190,000 BPD month-on-month to produce an average 1.89 MMBPD in November, accounted for the biggest single increase.

Smaller increases of 40,000 BPD and 10,000 BPD came from Iran and Nigeria. Iran produced 3.81 MMBPD in November against 3.77 MMBPD in October, while Nigeria increased output to 2.24 MMBPD from 2.23 MMBPD in October. With OPEC's basket price having averaged $28.54per barrel in October and $28.45per barrel in November, the group's failure to make a significant cut towards the new ceiling should come as no surprise.

The September decision to reduce output by 900,000 BPD from November stunned world oil markets. Ministers meeting in Vienna last week left quotas unchanged but, despite the crude basket hovering around the top end of OPEC's $22-28per barrel target band, talked about the likely need to cut output early next year.

Paradoxically, talk of cutting production has come at a time when, in theory, under the terms of the group's price band mechanism, OPEC should be preparing for a possible output increase. If the basket stays above $28per barrel for 20 consecutive trading days, OPEC should release an additional 500,000 BPD of crude onto the market.

Under the current countdown, the basket has spent five consecutive trading days above $28per barrel. But many analysts are predicting a sharp drop in oil demand in the second quarter of next year, and OPEC ministers are anxious to avert a possible price collapse.

OPEC's own Vienna secretariat is forecasting that demand for OPEC oil will average only 24.48 MMBPD in the second quarter, and that figure includes Iraq which is steadily working to boost its output after the war earlier this year that ousted former President Saddam Hussein. Iraqi oil minister Ibrahim Bahr al-Ulum said last week in an interview in Vienna that Baghdad hoped to export an average 2 MMBPD of crude in the first quarter of next year and to boost exports to 2.5 MMBPD by the third quarter. Ulum said the target for production was 3 MMBPD by the end of 2004. (*)