Oil production by the 12 Opec nations slipped less than 1 per cent in December, the first month after the group refused to cut output as crude prices tumbled, a Bloomberg survey showed.
Output by Opec fell 122,000 barrels a day, or 0.4 per cent, to 30.239 million last month, led by declines in Saudi Arabia, Libya and the UAE, according to the survey of oil companies, producers and analysts.
Brent and West Texas Intermediate futures dropped to the lowest levels since May 2009 yesterday, capping the worst year since 2008. Opec left its production quotas unchanged at a November 27 meeting in Vienna, prompting speculation that the group will let crude slide low enough to slow US production that’s climbed to the highest level in three decades.
“Ultimately the big producers will make significant cuts to support prices,” Dan Heckman, Kansas City, Missouri-based national investment consultant at US Bank Wealth Management, said by phone. His firm oversees about $120 billion. “It will take time to work off this huge supply glut.”
Saudi Arabia trimmed output by 150,000 barrels a day to average 9.5 million last month, the biggest decline. The 300,000-barrel-a-day Khafji offshore fields in the Saudi Arabian-Kuwaiti neutral zone were shut on October 16 because of environmental concerns. Asian demand for Saudi crude is weak, according to a person familiar with the matter.
“For a long time Opec, in particular the Saudis, has been the swing producer,” Adam Wise, who helps run a $6 billion oil and gas bond portfolio as a managing director at John Hancock in Boston, said by phone. “They would cut production when prices were heading too low. This isn’t a role they want to perform anymore.”
Libyan output fell 130,000 barrels a day to 450,000 in December, the lowest level since July. Production has slumped since the 2011 rebellion that ended Muammar Qaddafi’s 42-year rule. The country pumped 1.585 million in January 2011.
The North African country is now pumping less than 300,000 barrels a day after Islamist militants shifted attacks to energy facilities including Es Sider, the country’s largest oil export terminal, said Energy Aspects. One of six storage tanks set ablaze in the assault on Es Sider collapsed on December 29, Ali Al Hasy, spokesman for the Petroleum Facilities Guard, said by phone. The fires started on December 25, when the Islamists shot rockets at the port in a second attempt to take it.
The UAE trimmed production by 100,000 barrels a day to 2.7 million last month. There was decline in shipments to Japan, where the Emiratis store crude. The Japanese economy is contracting and cargoes were delivered in November, reducing the need in December.
Iraqi production rose 150,000 barrels a day to 3.52 million, the most since 2000, according to the survey. It was the biggest output gain in December. The central government reached a deal with its semi-autonomous Kurdish region early last month on oil exports through Turkey, paving the way for more shipments to international markets. Iraq is Opec’s second-biggest producer.
Nigeria’s production climbed 110,000 barrels a day to 2.08 million, December’s second-biggest increase. Output is often disrupted by unrest in the Niger River delta, the country’s main oil-producing region, leading companies to declare force majeure, a legal step that protects them from liability when they can’t fulfill a contract for reasons beyond their control.
Royal Dutch Shell lifted force majeure and resumed production at the EA field in December after repairs were completed, the company said. Shell reopened the Nembe Creek oil pipeline, the company said in an emailed statement on December 3.
November’s total was revised 199,000 barrels a day lower to 30.361 million because of changes to Iraqi, Kuwaiti, Nigerian and Ecuadorean estimates.
Opec ministers are scheduled to convene on June 5 in Vienna.
business@thenational.ae
Follow The National's Business section on Twitter
