OPEC Output Hits 14-Month High

The crude oil supply from OPEC is rising in February to the highest in 14 months led by Angola and Saudi Arabia, a survey showed, further reducing compliance with output targets.

Supply from the 11 OPEC members with output targets, all except Iraq, is averaging 26.80 million bpd, up from a revised 26.69 million bpd in January 2010, according to the survey of oil firms, officials and analysts.

The survey implies OPEC has made 53% of promised supply cutbacks versus 56% in January 2010.

OPEC, source of more than a third of the world's oil, meets to set policy on 17 March 2010 and the widening gap between its supply target and actual output is likely to be a main topic of debate.

Even so, analysts said the extra barrels were not unwelcome in the market given that oil prices remain within the range favored by many members and inventories, which ballooned in 2009 due to falling demand, were coming down.

'OPEC told us that given the current economic environment, their goal is oil at US$70 to US$80. As long as prices are in that range, they are happy,' said Mike Wittner, analyst at Societe Generale in London.

'The output creep has been fairly limited in recent months, and with stocks coming down the market is absorbing it.'

Oil inventories in countries of the Organization for Economic Cooperation and Development (OECD) in December 2009 were little changed on a year earlier in terms of days of future demand, according to the International Energy Agency.

OPEC has left its output ceiling unchanged for more than a year since announcing a record supply curb of 4.2 million bpd in December 2008 to combat lower demand and prices, which were both hit by the economic crisis.

Supply from the OPEC-11 is 1.96 million bpd higher in February 2010 than their target of 24.84 million bpd, the survey found, meaning the group lowered output by 2.24 million bpd of the promised curbs.

That gave the 53% compliance rate, which is down from its 81% peak reached in April and March 2009 according to estimates. With two days left of February, the final figures for the month may change. - Trade Arabia