OPEC Cuts Call on Crude to 30.04 MMbl/d

Source:

"In its latest monthly oil market report, OPEC trimmed its forecast of the call on OPEC crude for 2012 as a whole to 30.04 MMb/d from the 30.15 MMb/d projected a month ago."

OPEC's 12 member countries produced an average 30.898 million barrels per day (MMb/d) in January, nearly 900,000 barrels per day (b/d) more than their new output ceiling that came into effect at the beginning of the year and some 1.35 MMb/d above expected demand for OPEC crude in the first quarter, the oil cartel's Vienna secretariat said February 9.

In its latest monthly oil market report, OPEC trimmed its forecast of the call on OPEC crude for 2012 as a whole to 30.04 MMb/d from the 30.15 MMb/d projected a month ago. (See Platts survey of OPEC).

But for the first three months of this year, OPEC slashed its previous forecast by 290,000 b/d, to 29.55 MMb/d from 29.84 MMb/d a month ago.

This suggests that OPEC may need to rein in production over the next two months.

Although OPEC's December agreement sets an output ceiling of 30 MMb/d for all 12 members, including Iraq and Libya, it does not include individual quotas.

Any reining in of production will, therefore, be entirely on a voluntary basis.

The January production estimates, derived from secondary sources, show production from OPEC kingpin Saudi Arabia falling to 9.613 MMb/d from 9.72 MMb/d in December, and that of Libya recovering to 990,000 b/d from 798,000 b/d the previous month.

OPEC's overall month-on-month output increase was 56,000 b/d.

Looking ahead, OPEC has made slight quarterly adjustments to its forecasts of demand for crude from its 12 members.

Second quarter demand is now seen at 28.9 MMb/d, 80,000 b/d lower than previously forecast.

Third quarter demand is barely changed—30.85 MMb/d compared with the 30.84 MMb/d of the previous report, but the fourth quarter call is trimmed by 90,000 b/d to 30.82 MMb/d.

OPEC, which estimated Iranian crude output to have dropped to 3.478 MMb/d in January from 3.521 MMb/d in December, made no direct reference to the European Union's Jan. 23 decision to ban the import of Iranian crude from July 1.

Iran exports some 500,000 b/d of crude to EU countries.

Instead, the report referred to increased demand for heavy sour grades, "particularly for [Russian] Urals from European and Chinese buyers, who see this crude as a suitable alternative to some rival Middle East barrels."

"European refiners in particular have been intensively searching for alternatives grades," OPEC said, without saying why European refiners are seeking alternatives with such intensity.

OPEC also referred to "concerns about a possibly tight sour market due to geopolitical factors."

Citing economic worries in the U.S. and European Union, OPEC cut its estimate of world oil demand growth this year to 940,000 b/d this year, 120,000 b/d down from its previous forecast a month ago.

"Recent economic setbacks have pushed the future forecast of world oil demand further down. Worries about the U.S. economy, along with the EU debt problem, are adding more uncertainty to world oil needs over the next 12 months," OPEC said.

In outright terms, OPEC expects world oil demand to average 88.76 MMb/d in 2012, up from 87.82 MMb/d in 2011.

Growth is seen strongest in China, where oil use is set to rise by 420,000 b/d to 9.83 MMb/d, although this marks a slight slowdown from last year's estimated increase of 460,000 b/d.

Other notable increases in demand in 2012 are expected to come from the Middle East, Latin America and other Asian countries, OPEC said.

Oil demand in the developed economies of the OECD is seen falling to 45.66 MMb/d, down 170,000 b/d from last year's average of 45.832 MMb/d, OPEC said, mainly due to an ongoing decline in consumption in western Europe.

"Waning OECD economies are affecting the oil market negatively and imposing a large amount of uncertainty for the short term," it said.

On the supply side, OPEC trimmed its estimate of the expected increase in non-OPEC oil production this year to 680,000 b/d, down 10,000 b/d from its previous forecast.

The growth in non-OPEC supply in 2012 is seen coming mainly from the U.S., Canada, Brazil, Colombia and the former Soviet Union, offset by smaller declines in the UK, Norway, Mexico and Syria.

OPEC Produces 30.87 MMb/d in January: Survey

OPEC crude output rose to 30.87 MMb/d in January from 30.83 MMb/d in December, leaving the oil cartel overproducing its brand new ceiling by 870,000 b/d, a Platts survey of OPEC and oil industry officials and analysts showed Feb. 9.

A 200,000 b/d increase in Libyan production to 1 MMb/d, just 600,000 b/d short of pre-uprising output early last year, more than offset combined reductions totaling 170,000 b/d from Angola, Iran, Nigeria and Venezuela.

UAE production also saw a small increase of 10,000 b/d to 2.56 MMb/d.

The survey estimated output from OPEC kingpin Saudi Arabia at 9.8 MMb/d, unchanged from December.

Earlier, on Feb. 9, OPEC trimmed its forecast of the call on OPEC crude for 2012 as a whole to 30.04 MMb/d from the 30.15 MMb/d projected a month ago.

But for the first three months of this year, OPEC slashed its previous forecast by 290,000 b/d, to 29.55 MMb/d from 29.84 MMb/d a month ago.

This suggests that OPEC may need to rein in production over the next two months.

OPEC ministers in December agreed to set crude output for all 12 members, including Iraq and Libya, at 30 MMb/d. But they did not set individual quotas.

Platts

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