LONDON (Reuters) – OPEC oil supply is likely to fall in February as members enforce a deal to cut output, an industry consultant said on Monday, increasing the group’s scope to lower production further at a March 15 meeting.
OPEC’s 11 members with output targets, all except Iraq, are expected to pump 25.32 million barrels per day (bpd), down 980,000 bpd from January, Conrad Gerber of Geneva-based Petrologistics told Reuters.
The figures suggest the Organization of the Petroleum Exporting Countries has delivered on 89 percent of supply cutbacks promised since last year as oil prices collapsed due to the economic crisis.
Analysts said the high rate of adherence increases OPEC’s scope to lower output further at its meeting next month in Vienna. Any further cutback would have limited credibility if previous curbs had not been met.
“If true, this represents a much better compliance level than we’ve seen before,” Philip Wiper of oil brokers PVM said.
“At this sort of level and better, OPEC’s ability to avoid internal rows is dramatically increased, (as is) the ability to agree upon a new cut at the March meeting if they feel this is required.”
OPEC since September has decided to lower supply by a total of 4.2 million bpd, about 5 percent of daily world demand, to support oil prices that have plunged more than $100 a barrel as recession erodes demand.
The Petrologistics estimate suggests OPEC is pumping 480,000 bpd above a collective target of 24.84 million bpd that took effect on January 1. That means members have made 3.72 million bpd of the 4.2 million bpd cutback promised.
According to a Reuters calculation, those figures give a compliance rate of 89 percent, historically one of OPEC’s highest-ever levels of adherence to an agreement to limit supply.
“OPEC is doing very well indeed,” said Gerber of Petrologistics. “They have really turned down the taps.”
Oil was trading higher on Monday. U.S. crude was up 43 cents at $40.46 a barrel by 9:39 a.m. EST. It has collapsed from a record near $150 since last year.
SAUDI, OTHERS LOWER SUPPLY
Saudi Arabia, Iran, Angola, Kuwait and the United Arab Emirates were among the OPEC countries to lower output in February, Petrologistics said.
Top world oil exporter Saudi Arabia has led the OPEC cutbacks. It lowered supply to 7.9 million bpd, down from 8.05 million bpd in January and below its OPEC target of 8.05 million bpd, Petrologistics said.
Iran, OPEC’s second-largest producer behind Saudi Arabia, is lowering production in February but still exceeding its target. It is expected to pump 3.55 million bpd, down 300,000 bpd from January.
Angola, holder of the OPEC presidency this year, is also implementing more of its share of the reduction, lowering output to 1.65 million bpd in February. Its target is 1.52 million bpd.
Kuwait and the United Arab Emirates are likely to trim supply further in February to 2.26 million bpd and 2.25 million bpd, respectively.
With Iraq’s production at 2.28 million bpd in February, all 12 OPEC members are expected to pump 27.6 million bpd this month, down 1.1 million bpd from 28.7 million bpd in January.
Petrologistics measures OPEC supply, which excludes oil produced and placed in storage, by tracking oil tanker shipments and estimating domestic consumption. OPEC does not issue timely estimates of its own production.
The latest OPEC reduction of 2.2 million bpd, its largest ever single supply cut, took effect on January 1. It delivered on 67 percent of the promised curbs in January according to a Reuters survey.
Oil would have fallen to $20 without OPEC intervention but oil markets face tough times in 2009 amid the global financial crisis, Kuwait’s state news agency cited an oil official as saying on Monday.
“The decisions taken by OPEC in the past few months protected oil prices from a big decline,” Nawal al-Fuzaia, Kuwait’s national representative to OPEC told KUNA.
OPEC meets on March 15 to decide oil output policy. Several members of the group, including Iran, Libya and Venezuela, have signaled that the group may reduce production further next month.