OPEC’s production may be lower than anticipated in January
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.