OPEC reduced crude production in November to the lowest level in more than two years as output dropped below the organization’s 30 million barrel-a-day ceiling for a third month.
The Organization of Petroleum Exporting Countries pumped 29.63 million barrels last month compared with 29.83 million in October, OPEC said in its monthly oil market report today, citing data from secondary sources. That’s the lowest since May 2011. The 12-nation group decided to maintain its output limit of 30 million at a meeting in Vienna last week because members were “all satisfied,” Ali al-Naimi, Saudi Arabia’s oil minister, told reporters on Dec. 4.
“In taking this decision, member countries reconfirmed their readiness to promptly respond to unforeseen developments that could have an adverse impact on an orderly and balanced oil market,” OPEC said in today’s report.
Analysts at banks including BNP Paribas SA, Citigroup Inc. and Deutsche Bank AG predict that some members of OPEC, notably Saudi Arabia, will probably need to reduce output in 2014 to prevent a global glut. The U.S. is producing the most oil in a quarter-century, while Iraq, Libya and Iran have said they plan to increase exports in the next several months.
Output from Saudi Arabia, OPEC’s biggest producer, fell to a five-month low of 9.63 million barrels a day last month from 9.71 million in October, according to the report. Production also dropped in Libya, Nigeria, the United Arab Emirates, Algeria, and Kuwait, while supplies climbed in Iraq, Iran, and Angola.
OPEC has pumped below its 30 million barrel-a-day target since September, reports for this month and last showed.
The spread between U.S. West Texas Intermediate and North Sea Brent crudes will narrow in the coming year, according to the group. “Additional pipeline capacity to the U.S. Gulf Coast becomes available” will ease a glut at WTI’s delivery point in Cushing, Oklahoma, OPEC said. The gap traded at about $11.65 a barrel today after narrowing from $19.01 on Nov. 27.
World oil consumption is expected to gain by 1 million barrels a day next year to 90.84 million barrels, according to the report, little changed from last month’s estimate. Demand for OPEC’s crude is forecast to drop to 29.6 million barrels a day, or a decline of 300,000 barrels from this year.
Production from nations outside of OPEC will increase 1.2 million barrels a day next year to average 55.32 million barrels a day, with gains from the U.S., Canada and Russia, OPEC said. That’s little changed from last month’s estimate.
The International Energy Agency, an adviser to oil-consuming nations in Paris, will release its monthly report tomorrow.