OPEC’s oil output fell by 751,000 barrels per day to 31.6 million barrels per day in December
Oil production by OPEC fell in December as members appeared to get a jump on their pledge and that of close non-cartel producers to cut daily output beginning in January as global oil prices plunged.
OPEC’s oil output fell by 751,000 barrels per day to 31.6 million barrels per day in December, the Organization of the Petroleum Exporting Countries said in its monthly report out Thursday.
De facto OPEC leader Saudi Arabia slashed its production by more than expected, by 468,000 bpd to just over 10.5 million bpd, according to independent country data, reported by CNBC.
Last month, OPEC struck a deal with major producer Russia and nine other nations to keep 1.2 million barrels per day out of the market starting in January.
Crude prices currently have risen by more than 20% from annual lows reached at the end of 2018, on signs the global oversupply is being brought into balance. December’s low was made on back of a 40% price plunge during the fourth quarter of last year, from four-year highs reached as recently as the start of October.
In early Thursday trading, West Texas Intermediate crude for February delivery CLG9, -1.05% fell 75 cents, or 1.4%, to $51.36 a barrel on the New York Mercantile Exchange. March Brent crude LCOH9, -0.72% fell 70 cents, or 1.1%, to $60.32 a barrel on ICE Futures Europe.
In the report, OPEC noted rising interest rates in the U.S. and elsewhere, including expectations for continued tightening in 2019, although at a less-aggressive pace, which shouldn’t discourage production.
“While the economic risk remains skewed to the downside, the likelihood of a moderation in monetary tightening is expected to slow the decelerating economic growth trend in 2019,” OPEC said. “If the anticipated moderation in monetary policies coupled with an improvement in financial markets materializes, this could provide further support to ongoing increases in non-OPEC supply.”
The potential increase in crude supply will make it essential for OPEC, Russia and other producer nations to continue coordinating production to keep the market balanced, the cartel said.
The pullback in December OPEC production was deepened by supply disruptions in Libya and Iran. Iraq saw the biggest jump in production in the final month of the year. It’s output rose 88,000 bpd to just over 4.7 million bpd.
December’s is OPEC’s first monthly report since Qatar left the organization, in part amid an ongoing blockade by its neighbors, including Saudi Arabia and UAE.