OPEC says pumping more than new ceilingBy Margaret McQuaile & Richard Swann in London January 17, 2012 - OPEC's new 30 million b/d crude production ceiling came into effect at the beginning of January, but OPEC's latest monthly oil market report on January 16 showed that the group's output had already exceeded the new ceiling by more than 800,000 b/d in December. December volumes were also well above the 30.1 million b/d which OPEC estimates as the call on its crude this year -- a 60,000 b/d upward revision from last month's report -- and the 29.84 million b/d which it sees as demand for OPEC crude in the first quarter. Using secondary sources, OPEC estimated production from all 12 members at 30.822 million b/d in December, 171,000 b/d more than in November. Saudi Arabian production was estimated at 9.763 million b/d, slightly down from 9.783 million b/d in November. Libyan production recovered to an average 773,000 b/d in December from 563,000 b/d in November, according to the estimates. Other small increases came from the UAE and Iraq, whose respective output averaged 2.59 million b/d and 2.72 million b/d. Demand for OPEC crude is projected to fall to 28.98 million b/d in the second quarter, traditionally the weakest season for oil demand, before rising to 30.84 million b/d in the third quarter and 30.91 million b/d in the fourth. A Platts survey of OPEC and oil industry officials and analysts last week estimated OPEC's December production at 30.83 million b/d, already significantly above the new ceiling that was agreed at the group's December 14 meeting and which came into effect on January 1 this year. The new ceiling does not define individual quota levels, but OPEC said in its official communique that member countries had agreed to reduce output voluntarily if this became necessary. OPEC said in its latest report, meanwhile, the eurozone crisis had been a key factor beyond oil price volatility but had so far had little impact on market fundamentals in other regions. "However, if the situation were to worsen, the effect on the oil market could be seen not only through a further decline in oil demand in Europe but also with spillover effects on oil demand in the emerging economies, amid an adequately supplied market," OPEC said. "Whether this materializes, the ongoing impact of the eurozone debt crisis on market sentiment is also likely to add to oil price volatility," it said. "Effective steps to meet these challenges should lead to an improvement in economic growth and increased oil market stability," OPEC continued. But, it added, "at the same time, geopolitical uncertainties are likely to continue impacting crude oil prices going forward, either by increasing or reducing the risk premium in the market." The report made no mention of a European Union ban on the import of Iranian oil that has already been agreed in principle and is expected to be formalized at a January 23 meeting of EU foreign ministers. The EU imports an estimated 500,000 b/d of Iranian crude. OPEC's report projects world oil demand at 88.9 million b/d in 2012, an upward revision of 30,000 b/d from its previous forecast a month ago. Year on year, OPEC sees demand rising by 1.21 million b/d, slightly lower than its previous estimate of 1.22 million b/d. Oil demand from OECD countries is expected to fall to 45.8 million b/d in 2012 from 45.87 million b/d in 2011, with growth in demand coming instead from China (up 420,000 b/d), the Middle East and Latin America. OPEC also made only minor revisions to its estimates of non-OPEC oil supply in 2011 and 2012. The group now expects non-OPEC oil supply to average 53.1 million b/d in 2012, down from a previous estimate of 53.13 million b/d. Growth in non-OPEC oil supply is expected to amount to 690,000 b/d this year, up from a previous estimate of 670,000 b/d and from a much smaller estimated increase in 2011 of 130,000 b/d. The increase in non-OPEC oil supply is expected to come mainly from Canada, the US, Latin America and the former Soviet Union, with gains from these regions outweighing declines from Mexico, Norway and the UK. To subscribe or visit go to: http://www.platts.com |