OPEC Oil Output Slips Before Vienna Meeting
OPEC oil output has fallen in November as Angolan production has slipped due to maintenance and Saudi Arabia has kept a lid on supply to support the market before the initial public offering (IPO) of state-owned Saudi Aramco, a Reuters survey found.
On average, the 14-member Organization of the Petroleum Exporting Countries has pumped 29.57 million barrels per day (bpd) this month, according to the survey. That is down 110,000 bpd from October’s revised figure.
The survey suggests Saudi Arabia, after resuming normal supply after attacks on facilities in September, is still pumping far less than an OPEC-led supply deal allows. OPEC meets in Vienna to review the pact on Dec. 5, the same day Aramco is due to announce the final offer price.
OPEC, Russia and other allies, known as OPEC+, agreed to reduce supply by 1.2 million bpd from Jan. 1. OPEC’s share of the cut is about 800,000 bpd, to be delivered by 11 members, with exemptions for Iran, Libya and Venezuela.
The producers are expected to extend their supply pact at meetings on Dec. 5-6. OPEC delegates have said the producers could discuss deeper supply cuts amid forecasts of excess supply in 2020.
“The minimum is to extend,” said an OPEC delegate.
Oil LCOc1 has slipped to $63 a barrel after spiking to $72 following the Sept. 14 attacks on Saudi oil plants. The current price is below the levels many OPEC countries need to balance their budgets and below the levels officials say they favor.
The 11 OPEC members bound by the agreement, which for now runs until March 2020, have easily exceeded the pledged cuts. Compliance has risen to 152 percent in November, the survey found, from 135 percent in October, although Iraq and Nigeria remain laggards among larger producers.
Oil prices will remain subdued in 2020 as growth concerns weigh on demand and fuel a glut of crude, a Reuters poll showed on Friday.
The poll of 42 economists and analysts forecast Brent LCOc1 to average $62.50 a barrel next year, little changed from last month’s $62.38 outlook, which was the lowest prediction for 2020 in about two years.
The benchmark has averaged about $64 per barrel so far this year.
“There is simply too much oil in the market,” LBBW analyst Frank Schallenberger said.