OPEC’s pro­duc­tion may be lower than an­tic­i­pated in Jan­uary

Business a.m. - - ENERGY, POWER & RENEWABLES -

THE OR­GANI ZATION OF PE­TRO­LEUM EX­PORT­ING COUN­TRIES’ (OPEC) Jan­uary pro­duc­tion might likely to come in lower than an­tic­i­pated, sources close to the car­tel have said.

Sadad al Hus­seini, for­mer ex­ec­u­tive vice pres­i­dent of Saudi Aramco, told CNBC that OPEC is likely to cut in Jan­uary about 1 mil­lion bar­rels per day off its Oc­to­ber pro­duc­tion lev­els, adding that it is pos­si­ble that the car­tel could cut as much as 1.2 mil­lion bar­rels per day.

That is in ad­di­tion to its al­lies which promised to cut 400,000 bar­rels per day. The oil bloc agreed last month to shave 800,000 bar­rels per day off its Oc­to­ber pro­duc­tion lev­els, with its non OPEC al­lies agree­ing to cut 400,000 bar­rels per day, for a com­bined 1.2 mil­lion bar­rels per day.

All signs from OPEC this past week, fol­low­ing a bru­tal oil price slide, have all in­di­cated that OPEC was aware that the 1.2 mil­lion bar­rels per day in promised cuts might not sta­bi­lize the oil prices. The United Arab Emi­rates En­ergy Min­is­ter said on Tues­day that a mar­ket re­bal­ance should take place in the first quar­ter of 2019; he also added that OPEC would cut deeper if it turned out to be an in­suf­fi­cient vol­ume of oil taken off the mar­ket.

Also, Saudi Ara­bia’s ex­ports had fallen more sharply than ex­pected, and in­di­ca­tions are to­day that fewer OPEC bar­rels—the fewest in five years, in fact—made their way to the United States in De­cem­ber. Most an­a­lysts agree that oil prices will stay low if OPEC and its al­lies fail to make good on its prom­ise.

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