Oil at $90 brings small OPEC supply rise: survey

By @ibtimes on

OPEC output has risen slightly in December as Nigerian supply has increased, a Reuters survey found, indicating the group has yet to boost production substantially in response to prices at a 26-month high.

Supply from the 11 members of the Organization of the Petroleum Exporting Countries with output targets, all except Iraq, has averaged 26.75 million barrels per day (bpd) this month, up from 26.70 million bpd in November, according to the survey of oil companies, OPEC officials and analysts on Thursday.

The increase mainly reflects higher supply in Nigeria after a pipeline was fixed and other technical factors elsewhere in the group that affected output. OPEC officials have said a rise in prices to $100 a barrel -- above the 26-month high of $91.88 hit this week -- would not necessarily prompt a supply increase.

Until now, production was adequate to meet demand, said Christophe Barret, an oil analyst at Credit Agricole who expects OPEC will need to boost supplies in 2011.

OPEC, source of more than a third of the world's oil, left its oil output target unchanged at a December 11 meeting, keeping the same level since a record reduction of 4.2 million bpd in December 2008 when recession hit demand and prices.

Production has risen since then as prices and demand have recovered. Even so, the survey found that the OPEC members with the most scope to boost supplies -- Saudi Arabia, Kuwait and the United Arab Emirates -- kept supply largely steady in December.

The market is well supplied and there is no shortage, said an OPEC delegate, who declined to be identified by name. Our only concern is the price, how high it will go.

OPEC supply including Iraq has risen 70,000 bpd this month, according to the survey. With a day left in December, the final figures for the month may change.

Oil traded down below $91 a barrel on Thursday.

NIGERIAN SUPPLY

Nigeria boosted supplies by 90,000 bpd because of higher output from crude streams including Qua Iboe and Bonny Light.

Royal Dutch Shell said on December 20 it ended a one-month force majeure on exports of Bonny Light crude after repairing a pipeline damaged by oil theft.

Output also climbed in Venezuela because of higher supply from the country's crude upgrading plants. Production in the United Arab Emirates edged up because of increased allocations to customers of some crude grades.

Iraqi output rose due to higher exports, the survey found, but supply to the market during the month has been lower than production figures given by Iraqi officials.

The country's new oil minister, Abdul Kareem Luaibi, said on Monday production was above 2.6 million bpd, the first time it has reached that level in 20 years.

Among the countries with lower output, Angolan supply declined the most due to maintenance work and technical glitches at some oil installations.

Overall, the survey found that the 11 members of OPEC bound by the 2008 deal to reduce output delivered 55 percent of the reduction in December, compared with 56 percent in November. Compliance peaked at 80 percent in 2009.

OPEC has yet to be convinced that recovering demand or a strain on supplies, rather than speculation by traders, is at the root of rising prices. Officials have said a rise in prices to $100 caused by speculation would not prompt a rise in the target.

If it goes to $100 due to speculation, OPEC will not move, OPEC Secretary General Abdullah al-Badri said this month.

(Reporting by Alex Lawler; Editing by Barbara Lewis and Jane Baird)

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