BLBG: Oil Rises After Saudi Arabia Says Production Is Near OPEC Quota
By Alexander Kwiatkowski
Dec. 11 (Bloomberg) -- Oil rose a second day after Saudi Arabia signaled the world’s biggest exporter cut output more than analysts expected to stem the five-month plunge in prices.
Saudi Oil Minister Ali al-Naimi said the kingdom pumped 8.493 million barrels of oil a day in November, close to its OPEC production quota of 8.477 million barrels a day. The total is 287,000 barrels a day less than estimated by the Paris-based International Energy Agency.
“Everybody was looking to Saudi Arabia and saying they have to do something otherwise we will have even lower prices,” said Ehsan Ul-Haq, head of research at Vienna-based JBC Energy GmbH. “Now Saudi Arabia can say they are complying fully and everybody should do the same.”
Crude oil for January delivery rose as much as $2.41, or 5.5 percent, to $45.93 a barrel on the New York Mercantile Exchange. It traded at $45.61 a barrel at 11:41 a.m. in London.
Saudi Arabia’s oil output was “absolutely” in line with its OPEC quota, al-Naimi said today in an interview in the Polish city of Poznan. Al-Naimi declined to comment further on OPEC policy.
Oil has tumbled 30 percent since the Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world’s oil, announced a 1.5-million-barrel-a-day output cut on Oct. 24 in Vienna. Prices fell as fuel demand slumped and speculation grew that some members were not complying with their agreed quotas.
‘Deadly Serious’
“The Saudis might have been impatient with the market’s skepticism, so they’ve decided some transparency is needed,” said Mike Wittner, head of oil market research at Societe Generale SA in London. “It shows they’re deadly serious about cutting already and serious about cutting more.”
OPEC’s previous oil-supply cuts aren’t enough and the group will need to make a “substantial” reduction at its next meeting, on Dec. 17, in Algeria, Libya’s top oil official Shokri Ghanem said in a Bloomberg TV interview today.
Brent crude oil for January settlement rose as much as $2.69, or 6.3 percent, to $45.09 a barrel on London’s ICE Futures Europe exchange. It traded at $44.93 a barrel at 11:42 a.m. local time.
The IEA, an adviser to 28 nations, said global oil demand will contract this year for the first time since 1983 and cut its outlook for 2009.
Consumption worldwide will shrink in 2008 by 200,000 barrels a day, or 0.2 percent, the IEA said in a monthly report today. The reduction in demand is led by developed economies in the Organization for Economic Cooperation and Development, where consumption will tumble 3.3 percent. Next year’s growth may be wiped out if the economic slump deepens, the agency said.
To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net
