OPEC Crude Output Drops

OPEC crude oil supply fell in August 2010 to the lowest since November 2009 as reduced supplies from Nigeria, the UAE and Iraq offset increased output in Angola, a Reuters survey showed. Supply from the 11 members of the OPEC with output targets, all except Iraq, averaged 26.83 million bpd last month, down from 26.95 million bpd in July, according to the survey of oil companies, OPEC officials and analysts.

The decline mainly reflects output disruption in Nigeria and Iraq rather than an OPEC effort to improve adherence to output targets. Analysts say higher compliance is unlikely without a slide in oil prices. “OPEC would defend the floor of its informal US$70 to US$80-a-barrel range with cuts in actual output,” said Mike Wittner, global head of oil research at Societe Generale. “But in order for that to happen, prices would need to move significantly below US$70 and look like they are going to stay there for a while.”

OPEC, source of more than a third of the world’s oil, 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. Supply from the OPEC was 1.99 million bpd higher in August than their target of 24.84 million bpd, the survey found, meaning the group achieved 2.21 million bpd of the supply curbs. That left compliance at 53%, up 3% points from July. It peaked at 81% in April and March 2009, according to Reuters estimates.
Total OPEC supply including Iraq was down 140,000 bpd to 29.09 million bpd, the lowest since November 2009 based on Reuters surveys.

Iraqi output was curbed because of disruption in the flow of Kirkuk crude exports through a pipeline to Turkey. There were at least three outages last month on the link, which faces frequent sabotage and technical problems. The UAE trimmed supplies to customers in August, bringing output closer to its target. OPEC’s Arab members continued to show among the highest rates of compliance. While industry sources say that top OPEC exporter Saudi Arabia is using more crude in power plants, as it tends to during the summer months, sources in the survey reported no sign of an increase in crude supply to market. Angolan supply rebounded in August to 1.8 million bpd, with loading programmes showing three more cargoes being exported.- Gulf Times