The Organisation of Petroleum Exporting Countries pumped 29.63mn barrels last month compared with 29.83mn in October, Opec said in its monthly oil market report

Bloomberg

London

Opec reduced crude production in November to the lowest level in more than two years as output dropped below the organisation’s 30mn barrel-a-day ceiling for a third month.

The Organisation of Petroleum Exporting Countries pumped 29.63mn barrels last month compared with 29.83mn in October, Opec said in its monthly oil market report yesterday, citing data from secondary sources.

That’s the lowest since May 2011. The group decided to maintain its output limit of 30mn at a meeting in Vienna last week because members were “all satisfied,” Ali al-Naimi, Saudi Arabia’s oil minister, told reporters on December 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 yesterday’s report.

Analysts at banks including BNP Paribas, Citigroup and Deutsche Bank predict that some members of Opec, notably Saudi Arabia, will probably need to reduce output in 2014 to prevent a global glut. The US 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.

Yesterday’s Opec report was published before the head of Libya’s Petroleum Facilities Guard, Brigadier Idris Bukhamada, said that three oil ports in eastern Libya will reopen on December 15.

The Al Magharba tribe, which held a meeting yesterday, forced former PFG leaders to lift their blockade, Bukhamada said by phone from Ajdabiya. The ports, including Es Sider, the largest, had been closed since late July.

Output from Saudi Arabia, Opec’s biggest producer, fell to a five-month low of 9.63mn barrels a day last month from 9.71mn in October, according to Opec’s monthly report. Production also dropped in Libya, Nigeria, the United Arab Emirates, Algeria, and Kuwait, while supplies climbed in Iraq, Iran, and Angola.

“Downside risks to the oil price may require Opec to cut production to defend oil prices,” Michael Lewis, head of commodities research at Deutsche Bank in London, said in an e- mailed report yesterday. “Given our upbeat outlook for world growth we would view any attempt by Opec to defend the oil price as likely to be successful.”

Brent crude for delivery in January fell 17¢ to $109.22 a barrel at 1:49 pm in London on the ICE Futures Europe exchange, after rising as much as $1.06 earlier today, before the news on Libyan ports emerged. The North Sea grade, which is the benchmark for more than half the world’s oil, has dropped 1.7% in 2013.

Opec has pumped below its 30mn barrel-a-day target since September, reports for this month and last showed.

The spread between US West Texas Intermediate and Brent crudes will narrow in the coming year, according to the group. “As additional pipeline capacity to the US Gulf coast becomes available,” a glut will ease at WTI’s delivery point in Cushing, Oklahoma, Opec said. The gap traded at about $10.81 a barrel today after narrowing from $19.01 on November 27, the widest on a closing basis in eight months.

World oil consumption is expected to gain by 1mn barrels a day next year to 90.84mn barrels, according to the report, little changed from last month’s estimate. Demand for Opec’s crude is forecast to drop to 29.6mn barrels a day, or a decline of 300,000 barrels from this year.

Production from nations outside of Opec will increase 1.2mn barrels a day next year to average 55.32mn barrels a day, with gains from the US, Canada and Russia, Opec said. That’s little changed from last month’s estimate.

The International Energy Agency, the Paris-based adviser to oil-consuming nations, will release its monthly report today.

Opec’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the UAE and Venezuela.