OPEC 10 output edges up in Sep to 25.85 MBPD: Survey
Thursday, October 9 2003 - 03:14 AM WIB
Excluding Iraq, however, combined production from OPEC's 10 members bound by official output quotas was just 10,000 BPD up on August levels at 25.85 million BPD, the survey showed. Iraq's ongoing efforts to raise production towards pre-war levels produced an additional 400,000 BPD over the month to yield average output of 1.43 million BPD in September.
Among the OPEC 10, Algeria, Iran, Kuwait, Libya, Nigeria and Qatar pumped an additional 170,000 BPD between them. The only significant cut came from Saudi Arabia, whose production dropped from 8.65 million BPD in August to 8.5 million BPD in September. UAE output fell slightly, by 10,000 BPD, to 2.26 million BPD. The OPEC 10 exceeded their current 25.4 million BPD ceiling -- which remains in effect until the end of October -- by 450,000 BPD, the survey showed.
OPEC ministers meeting in Vienna Sep 24 took markets by surprise with a decision to cut the current ceiling by 900,000 BPD to 24.5 million BPD from the beginning of November.
Some ministers have warned that further cuts may be necessary to support prices, which they say could come under pressure from rising commercial inventories, higher non-OPEC output and recovering Iraqi production. This means that the OPEC 10 need to cut output by 1.35 million BPD by Nov 1 to comply with the new ceiling.
But some analysts and industry officials believe that OPEC 10 production could increase further in October as some members take the opportunity to maximize their output before the new cuts come into effect. OPEC's crude basket stood at $28.11 per barrel Tuesday, its second consecutive day above the cartel's $22-28 per barrel target band. For the year to Oct 2, the basket has averaged $27.84 per barrel.
Following the 900,000 BPD cut, analysts believe OPEC is unwilling to allow the basket drop to anywhere near $22 per barrel and that the group now sees the $25 per barrel mid-point of the band as a floor.
OPEC has what it calls a price band mechanism, which enables it to release an additional 500,000 BPD of crude if the basket stays above $28 per barrel for 20 consecutive trading days and to cut by the same volume if the basket falls below $22 per barrel for 10 days. But an OPEC delegate insisted Wednesday that OPEC was not obliged to wait for the basket to go below $22 per barrel before opting to cut output.
The cartel had the prerogative to cut, even if prices were relatively high, if it believed such action necessary to support prices.
Meanwhile, at least one OPEC member country, Venezuela, wants to see the price band raised.
President Hugo Chavez said last week he wanted OPEC to raise the price band to $25-32 per barrel. Oil minister Rafael Ramirez said Tuesday the proposal could be discussed at OPEC's Dec 4 conference in Vienna. (*)