Thursday, October 30, 2008

OPEC Production Rising

OPEC oil output rising in Oct - Petrologistics
By Alex Lawler
Oct 29th, 2008

* OPEC oil output expected to rise 200,000 barrels per day

* Saudi, UAE, Kuwait trim output, Iran and Angola pump more

OPEC's oil output in October is expected to rise by 200,000 barrels per day to 31.9 million bpd because of higher supplies from Iraq, industry consultant Petrologistics said on Wednesday.

The estimate also indicates that the Organization of the Petroleum Exporting Countries, excluding Iraq, is trimming output back to official target levels, in line with a Sept. 10 agreement to prop up prices.

Output from the 12 OPEC members with supply targets -- all except Iraq -- is expected to average 29.59 million bpd, little changed from 29.56 million bpd in September and less than their target of 29.67 million bpd.

"This has come down from well over 30 million barrels per day in August and is expected to come down further in November," Conrad Gerber, head of Petrologistics, told Reuters by telephone from Geneva.

Output is set to fall further, from November, following OPEC's decision on Oct. 24 to cut production by 1.5 million bpd in response to a steep fall in prices to about $66 a barrel, less than half the record high of $147.27 reached in July.

From Nov. 1, the production target for 11 OPEC members will drop to 27.3 million bpd.

OPEC's Gulf members are already trimming output, according to Petrologistics. Top exporter Saudi Arabia is expected to pump 9.05 million bpd in October, down from 9.2 million bpd in September.

Kuwait is forecast to lower supply by about 120,000 bpd in October and the United Arab Emirates is expected to curb output by 130,000 bpd, Gerber said.

Higher supply elsewhere in the group in October is offsetting the declines.

Angolan production is expected to rise by about 200,000 bpd because the BP Plc-led Plutonio field returned to service after maintenance work.

Iranian supply is forecast to climb to 3.85 million bpd from 3.7 million bpd in September. Its exports can vary month-to-month, affecting supply, while oilfield production remains steady.

Iraqi exports are rising in October, boosting supply to 2.31 million bpd from 2.14 million in September and accounting for the increase in overall OPEC output.

Petrologistics measures OPEC supply, which excludes oil produced but sent into storage, by tracking tanker shipments. OPEC itself does not issue timely estimates of its members' output.

Monday, October 27, 2008

Another Month, Another Billion Dollars For T. Boone Pickens

T. Boone Estimates He’s Down $2B From Drop in Oil, Gas Prices
October 27, 2008

Yet another profile of wind crusader T. Boone Pickens aired Sunday night — this time on 60 Minutes — and it had the usual details about the 80-year-old former oil baron’s plan to get the U.S. off its addiction to foreign oil. But 60 Minutes did score an interesting tidbit about how much Pickens and his investment firm BP Capital have lost since oil and natural gas prices started dropping in July: $2 billion!

The steep drop in oil and gas prices since July has cut the value of Pickens’ hedge fund in half. . . Overall, Pickens and BP Capital are down a staggering $2 billion. . . Boone acknowledges that is serious money. Asked if he’ll get it back again, he says, “Yeah, I’ll get it back.”

At the end of September the Wall Street Journal estimated that Pickens’ funds had lost about $1 billion this year, including $270 million of personal losses. “It’s my toughest run in 10 years,” Pickens told the Journal. “We missed the turn in the market, there’s nothing fun about it.”

But Pickens also told the Journal that he thought oil would finish the year around $120 or $125, barring a major global economic downturn. Well, the international economic downturn appears to be here. On Friday oil prices dropped to around $63. While it’s pretty hard to predict oil prices these days, we’re not sure it’s set to double in 2 months.

Sunday, October 26, 2008

Net Oil Exports - October 2008 Update

Net Oil Exports - October 2008 Update. Top 20 Exporters (93% of total exports).

Click on following link to download updated Excel spreadsheet

Click on following link to download updated Excel spreadsheet(450 kb):
scroll down to bottom of linked page and hit orange button on right and
then hit second prompt if download doesn't start immediately

chart, crude oil, crude oil exports, graph, net oil exports, net petroleum exports, oil exports

Sunday, October 19, 2008

OPEC quotas

In response to the rapidly falling price of crude oil, OPEC has called an 'emergency' meeting for this week, a month earlier than planned. Actually, two months early, since the November meeting was rescheduled not long ago from December.

Here are some charts showing what OPEC has actually been producing versus their quota levels.

This first chart contains only 9 of the 13 OPEC countries. Not included are the following:

Iraq - has no assigned quota.
Angola and Ecuador- these countries have only had quotas assigned since January. There have been no official changes to OPEC production quotas since then.
Indonesia - has been a net importer for years, has been producing far under its quota for years, and is leaving OPEC in January. Indonesia will not be included in any of the data contained in these charts.

This is what happened in the chart above: OPEC made two cuts of 1.2 mbpd in November 2006 and 500,000 bpd in February 2007. Those cuts remained in place until the September 2007 meeting, at which OPEC decided to raise production by about 500,000 bpd. So why does the raise look like it makes up the entire 1.7 mbpd that was originally cut? This is because OPEC finally decided to get partially serious and base their decisions on what was actually being produced by member countries instead of on their quota numbers. The result was to come up with new "production targets" which were composed of an equal distribution of about 500,000 bpd over July 2007 production numbers.

There are some interesting stories here, but the bottom line is this - the two countries who are most frequently labeled "price-hawks," Venezuela and Iran, have not been carrying their weight for the last few years when it comes to managing production levels. It is well known that Saudi Arabia is the lone, real swing-producer in the group, but Iran rarely alters its production significantly and Venezuela chronically underproduces its quota.

I think it can be generally assumed that the UAE, Kuwait, and Qatar (as solid allies of both the West and Saudi Arabia) fall in line with "what is expected from the team" as they say in auto-racing. Algeria and Libya might also be included in this group, however, the production levels of all these countries combined only equal Saudi's.

More and more it seems that OPEC quota/production changes are an attempt by Iran and Venezuela to get Saudi Arabia to lower its production. It doesn't appear that either has the ability to increase its production for various reasons and lowering production only means they bring in less dollars than they could if Saudi Arabia did more of the heavy lifting.

There are a few interesting things to note here (shown clearly in the chart):
1) OPEC seems to anticipate quota changes by a number of months and begin to react in that direction. Or maybe this is just the Saudi group acting on its own.
2) OPEC almost always cheats as a group. They over-produce by 500,000 bpd.
3) (Not clear from this chart, but you can see where it happened) When OPEC hit its low in the summer of 2007, Saudi Arabia was on target at its quota of 8.6 mbpd. Which means that all the cheating at that point was being done by the other 8 countries. Of course, after the quota had been raised Saudi was doing most of the cheating, producing as much as 800,000 bpd over their quota in July and August.

OPEC Plans to Cut Supply as Oil Prices Head Toward $50 a Barrel
By Grant Smith and Margot Habiby
Oct. 20 (Bloomberg)

OPEC, the supplier of more than 40 percent of the world's oil, plans to cut output for the first time in almost two years as the worst financial crisis since the 1930s sends crude toward $50 a barrel.

Options contracts to sell oil at $50 by December soared 28- fold in the past two weeks on the New York Mercantile Exchange. Goldman Sachs Group Inc. and Merrill Lynch & Co. analysts say crude, which fell more than 50 percent from a record high in July to $71.85 a barrel last week, may drop another 44 percent should the world economy slip into a recession.

The Organization of Petroleum Exporting Countries, which meets Oct. 24 in Vienna, three weeks earlier than planned, is facing the weakest growth in demand since 1993 just as new fields come on line from Angola to the Gulf of Mexico.

``OPEC is going to try to prevent some of the price decline,'' Francisco Blanch, head of global commodities research at Merrill in London, said in a Bloomberg television interview. ``It's going to be very difficult to stem a price fall.''

Options contracts that allow holders to sell 1,000 barrels of oil for $50 each by December closed at $280 on the Nymex on Oct. 17, up from $10 on Oct. 3.

Even at today's prices, Venezuela and Iran, two of the organization's 13 members, may struggle to balance budgets because they rely on energy sales for more than half of their revenue, according to estimates compiled by the U.S. Central Intelligence Agency.

GDP Down 25%

``Some countries like Venezuela and Iran need prices above $80 a barrel,'' said Leo Drollas, deputy director of the Centre for Global Energy Studies, a London-based consulting company. ``The Saudis have a bottom price of about $65 a barrel, but they might go ahead with a cut to keep solidarity within OPEC.''

Gross domestic product in the six-member Gulf Cooperation Council of Saudi Arabia, United Arab Emirates, Kuwait, Oman, Qatar and Bahrain would shrink 25 percent if oil averaged $50 next year, ING Bank NV estimates.

Ministers from Algeria, Libya, Iran and Venezuela already called for a reduction in supplies from the current quota of 28.8 million barrels a day. OPEC President Chakib Khelil, who is also Algeria's oil minister, said on Oct. 16 the ``ideal'' price for crude is between $70 and $90 a barrel. A week earlier he said OPEC is ``very likely'' to lower production.

Qatari Oil Minister Abdullah bin Hamad al-Attiyah told Al Jazeera TV the cut will likely be 1 million barrels a day, or 14 percent more than his nation pumps. Saudi Arabia, which dominates OPEC proceedings as the group's largest producer, has yet to comment on its intentions.

Reducing Estimates

While OPEC already agreed to curb production by observing output quotas after a Sept. 10 meeting to lower supplies by 500,000 barrels a day, members routinely pump more than their allocation, according to data compiled by Bloomberg. Since that session, Credit Suisse Group pared its forecast for oil next year by 32 percent to $75 a barrel. Deutsche Bank AG cut its 2009 assessment by 23 percent to $92.50 on Sept. 29. BNP Paribas SA lowered its outlook by 18 percent to $92.50 on Oct. 10.

At the same time, Exxon Mobil Corp.'s Saxi-Batuque fields off Angola's shore started pumping in August, while BP Plc's Thunder Horse field in the Gulf of Mexico is scheduled to increase supplies by the end of the year. World oil capacity will rise 1.45 million barrels a day in 2009, twice the rate of growth in demand, according to the International Energy Agency.

``Prices could fall as low as $50 a barrel during the fourth quarter if OPEC can't find a way to offset the financial meltdown,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.

The prospect of OPEC cuts, slowing economic growth and falling prices drove the Dow Jones Europe Stoxx Oil & Gas Index down 25 percent in the past five weeks. Irving, Texas-based Exxon Mobil, the world's biggest oil company, fell 37 percent this year, while The Hague-based Royal Dutch Shell Plc, the second- biggest, lost 33 percent.

$4 Gas

OPEC lowered its forecast for demand in 2009 last week, saying consumption will be 450,000 barrels a day less than expected at 87.21 million a day. The Paris-based International Energy Agency shaved its 2009 outlook the previous week and said this year's demand growth of 0.5 percent will be the weakest since 1993.

U.S. motorists are driving less after gasoline pump prices topped $4 a gallon in July. Vehicle-miles traveled on all U.S. roads that month were 3.7 percent lower than a year earlier, Federal Highway Administration data show. Prices fell to an average of $3.21 a gallon last week, according to the Department of Energy.

Output Cut

As demand declined, OPEC trimmed supplies 3.8 percent to 31.8 million barrels a day in September, according to Geneva- based tanker-tracking service PetroLogistics Ltd. Saudi Arabia's volume fell 520,000 barrels a day to 9.18 million, PetroLogistics said.

``This may be OPEC's toughest balancing act in their history,'' said Tetsu Emori, the fund manager at Astmax Co. in Tokyo, Japan's biggest commodities asset manager with $200 million under management. ``By the time OPEC announces a cut, they would be hoping to have seen the bottom of the price.''

The last time OPEC slashed quotas was at a December 2006 meeting in Abuja, Nigeria. That 500,000 barrel-a-day cut took effect in February 2007 and followed an earlier, 1.2 million- barrel reduction in October 2006. Those actions were reversed later in 2007 as prices rallied.

``The situation has gotten dire enough that they're willing to move and even become a topic of conversation'' during the U.S. election campaign, Ronald Smith, chief strategist at Alfa Bank in Moscow, said in a Bloomberg television interview. OPEC will cut by 1 million barrels a day ``at the very minimum'' and potentially ``wait until after the election, then add another million on top of it, or half a million,'' he said.

The Last Time OPEC Raised Production Targets

OPEC on Sept. 14 published a table on its Web site showing individual member production targets. The OPEC Secretariat removed the table after Venezuela protested that the published table wasn't official. (2007)

The Disappearing Table

August New allocation Change
output from Nov 1
Saudi Arabia 8,616 8,943 327
Iran 3,869 3,817 -52
UAE 2,573 2,567 -6
Kuwait 2,446 2,531 85
Venezuela 2,358 2,470 112
Nigeria 2,145 2,163 18
Libya 1,710 1,712 2
Algeria 1,354 1,357 3
Indonesia 839 865 26
Qatar 821 828 7

Total 26,730 27,253 522
(All figures in '000 barrels/day)

Wednesday, October 15, 2008

China - Oil Production

China is a net importer, but its status as the second largest petroleum consumer along with its ambiguous production situation makes it the most interesting oil story next to Saudi Arabia.

Its thriving economy and double-digit increases in petroleum consumption are setting it on a path to conflict with other importers as it tries to secure future supplies. For the last few years there have been many forecasts of China's production plateauing and falling. So far that hasn't happened. Yet interestingly, if we look at the oil China has already produced and its known reserves, we can get a good look at the problems involved with forecasting peak oil using Hubbert's methods. China was the first good example that demonstrated this issue, but I will cover more countries in the coming months.

Notes on reserves and 70% URR

The BP Annual Statistical Review starts tracking production in 1965, but that is sufficient in this case. China produced an average 227,000 bpd of oil in 1965, or about 6% of their present production level. This strongly suggests that previous to 1965 China's cumulative production was no greater than 500 millions barrels or a billion barrels. At the end of 2008, China will have produced a total of about 38 billion barrels. In 2008, China will produce 1.38 billion barrels.

BP lists China's proved reserves at the end of 2007 as 15.5 billion barrels, minus the 1.4 used this year leaves them with 14.1, meaning that the current rate, they would run out of oil in 10 years. But we know that oil production does not behave in that manner and they won't simply be out of oil 11 years from now. Production drops and tapers off. I've constructed the following chart to illustrate one possibility based on the available data.

Adding 38 billion barrels to 14.1 billion barrels we get 52.1 billion barrels of what are commonly referred to as URR, or ultimately recoverable reserves. This means that presently we are at 73% of URR. According to Hubbert, production should level off and start dropping around 50% of URR, suggesting China's production should have started dropping in the early 1990s at the latest.

But let's continue. Over the last 20 years, China has discovered and added to its proved reserves an average of about 1 billion barrels per year. If we assume this trend will continue and add 20 billion barrels onto a final analysis, we get a much prettier 53% of URR.

This next chart shows is constructed with a theoretical, additional 10 billion barrels of reserves added. I'll add one soon with the 20 billion barrels.

Here are excerpts from two articles and a report referencing the current situation in China. There may be conflicting forecasts/expectations of what the immediate future holds contained in them but they provide a good look at China's consumption and what is effecting it.

Back to the Future: Revisiting 1982 Auto Sales [4-page PDF]
by Jeff Rubin and Meny Grauman

World Auto Sales to Hit Record High on Soaring Demand from BRIC Countries

Despite the systemic problems facing the US auto market, the world market has seldom been better. This year should mark the seventh consecutive record for annual vehicle sales, led by continued strength in Brazil, Russia, India, China (BRIC) and the rest of the developing world. While vehicle sales in the second quarter fell a combined 7% in the United States, Canada, the European Union and Japan, they were up 20% in BRIC countries. In fact, total annual sales in these countries are expected to overtake the US next year for the first time ever.

Moreover, the very models that American motorists are shunning, motorists overseas are snapping up. SUV sales, which already make up roughly 8% of the red-hot Chinese car market, are up 40% since the beginning of the year, and demand for such vehicles is similarly strong in Russia as well. So great is the demand for SUVs in the Chinese market that General Motors plans to start shipping the Michigan-made Buick Enclave, a seven-passenger vehicle, to China. SUV demand is growing at double the rate of any other class of vehicle in the Chinese market and four times the pace of sales of fuel-efficient subcompact cars. As their own domestic auto market shrinks, American car companies better look overseas if they hope to be able to see sales growth in the future.

Asia's Oil Production Expected to Increase, Ease Stress on Global Supplies
By Patrick Barta
October 7th, 2008

China, India and other big energy users in Asia aren't about to become major oil exporters -- far from it. They still consume much more crude than they produce and that trend won't change.

But several countries, including China, are lifting oil output. The unexpected boost -- some industry analysts had said the region would struggle to maintain production levels in the current decade -- should help Asia meet more of its own demand and reduce stress on supplies for the rest of the world.

The International Energy Agency in Paris expects China, Vietnam, Malaysia and other Asian-Pacific nations to increase production by almost 300,000 barrels of oil a day in 2009, the region's biggest annual increase since at least the 1990s. When contributions from Central Asian nations such as Kazakhstan are added, the total increased production rises to about 500,000 barrels per day, analysts say. Overall, non-OPEC world production is only expected to grow about 760,000 barrels a day in 2009, the IEA says.

Asia's increased crude production is still a drop in the bucket compared to total world consumption, which is now approaching 87 million barrels a day. Moreover, many analysts believe Asian output will start falling in a few years, as big existing fields decline. Although growing at a slower pace in recent months, consumption continues to rise across the region, which means that any easing of supply pressures could be short-lived.

China's Faltering Oil Appetite
Steve Mufson
October 6th, 2008

A lot of people who forecast the future tend to draw a straight line forward from existing trends. That's why people forecast a continuation of the breakneck increases in Chinese oil consumption.

There are at least two reasons to question that. One is that the current financial crisis could hammer the U.S. economy, and cut deeply into our purchases of all kinds of stuff, including stuff that comes from China. If that happened, it's doubtful that China would keep up its double-digit economic growth in the coming months.

The other reason is more benign: China has drastically raised fuel prices, effectively slashing its subsidies for motor fuel. And we all know that when retail petroleum product prices rise sharply, we tend to use less of them. Will the Chinese be any different?

It's a question that matters to every one of us, whether a car owner or simply a consumer who buys goods that travel in trucks. That's because the challenge of meeting rising Chinese demand is expected to keep oil markets tight and prices high even if Americans buy more efficient cars.

I would think that given the relatively limited means of the average Chinese wage earner, Chinese drivers would be even more sensitive to a sharp increase in fuel prices.

And lo and behold, in August Chinese gasoline demand fell 5.6 percent, or 470,000 barrels a day, below June and 2.7 percent, or 200,000 barrels a day, below July levels.

One month is not enough to reach many conclusions, especially when that month and the months preceding it may have been distorted by stockpiling of fuel in advance of the Olympic games that took place in Beijing in August. (Ting notes that China went on an "inventory building binge" in November 2007 and that its gasoline and diesel inventories grew by 83 percent by August this year.) And the August consumption figure was still up 7.1 percent from August last year.

I would argue that higher prices will put China on a new, more gradual growth trajectory - with consumption still rising, but at a pace that should ease some of the pressure on oil markets, and prices at the pumps throughout the rest of the world.

tags: chart, China, crude oil, graph. Jeff Rubin, oil, oil demand, oil production, oil supply

More OPEC News

OPEC exports drop 600,000 bpd in September
Oct 14, 2008

OPEC seaborne oil exports, excluding Angola and Ecuador, fell 600,000 barrels per day (bpd) in September and dropped 840,000 bpd from Gulf suppliers, Lloyd's Marine Intelligence Unit (LMIU) said on Tuesday.

The London-based consultancy that tracks tanker exports said oil shipments from 11 OPEC producers, including Iraq, fell to 23.031 million bpd, down from 23.644 million bpd in the four weeks previous.

LMIU said supply from big Gulf producers, including Iraq, dropped 844,000 bpd from 18.553 million bpd to 17.709 million bpd in the same four weeks.

OPEC decided at a meeting in Vienna on Sept. 9-10 to comply strictly with its formal output target, a move officials said would result in the group trimming supply of crude oil by about 500,000 bpd from world markets.

Friday, October 3, 2008

Conflicting OPEC accounts for September

OPEC oil output falls in Sept-Reuters survey
By Alex Lawler
Oct. 3rd, 2008

* OPEC oil output expected to drop 310,000 barrels per day

* Decline in OPEC supply is first since April

* Saudi Arabia, Iran, Iraq, Nigeria, Angola supplying less

OPEC oil supply in September fell, the first monthly decline since April, as violence in Nigeria cut output and top exporter Saudi Arabia trimmed production, a Reuters survey showed on Friday.

The survey indicates that output from the Organization of the Petroleum Exporting Countries, source of two in every five barrels of oil, was falling even before it agreed at a meeting in September to trim output and prop up prices.

"We are in a moment of turmoil. Vision is blurred," Shokri Ghanem, the top oil official for OPEC member Libya, told Reuters. "We will give it a few days until things calm down, then we can form an opinion."

Supply from all 13 OPEC members fell to 32.39 mbpd in September from 32.70 mbpd in August, according to the survey of oil firms, OPEC officials and analysts.

The decline was due to supply disruptions in two of OPEC's African members, and lower shipments to customers from the group's top two producers Saudi Arabia and Iran.

Attacks on Nigeria's oil industry curbed output by 60,000 bpd, the survey found. During one six-day period in September, militants bombed pipelines, platforms, gas plants and oilfields, halting up to 150,000 bpd of production.

Angolan supply dropped because the BP Plc-led Plutonio field remained closed. The 200,000-bpd site shut on Aug. 16 following an incident at a gas plant at the facility.


Fewer barrels from Saudi Arabia also contributed to the decline in output.

The kingdom supplied 9.55 mbpd in September, down from 9.65 million bpd in August, according to the survey. It had raised output earlier in the year partly to quell what it saw as unacceptably high prices.

Iranian supply declined by 50,000 bpd due to lower exports. Iran's exports can vary month-to-month, affecting supply, while oilfield production remains little changed, analysts say.

The survey suggests the 12 OPEC members bound by deals to set supply policy, all except Iraq, pumped 30.18 mbpd, above their target of 29.67 mbpd, the survey found.

OPEC supply may fall further in coming months should members implement an agreement reached in September in Vienna to comply strictly with its formal output target, a move OPEC officials said would result in members trimming their actual supply of crude oil by about 500,000 bpd.

OPEC also adopted a new supply target of 28.8 million bpd -- effectively unchanged because it excludes Indonesia, which has suspended its membership from Jan. 1 2009.

Supply from Iraq declined in September by 90,000 bpd to 2.21 mbpd due to rising domestic consumption and a slowdown in exports, the survey found.

Following is crude output in millions of barrels a day.

September August Target*
output output output

Saudi Arabia 9.55 9.65 8.943
Iran 4.00 4.05 3.817
UAE 2.62 2.63 2.567
Kuwait 2.61 2.60 2.531
Venezuela 2.37 2.36 2.47
Iraq 2.21 2.30 (R)
Angola 1.80 1.85(R) 1.90
Nigeria 1.90 1.96 2.163
Libya 1.70 1.68 1.712
Algeria 1.41 1.40 1.357
Indonesia** 0.86 0.86 0.865
Qatar 0.86 0.86 0.828
Ecuador 0.50 0.50 0.52

OPEC-12 30.18 30.40(R) 29.67

TOTAL 32.39 32.70(R)

(R) = Revised

*OPEC agreed at a meeting on Sept. 9-10 to adopt a production ceiling of 28.8 million bpd for 11 members, all except Indonesia and Iraq.

The producer group declined to provide a list of individual members' output targets. The limits given are in line with figures previously issued by OPEC.

**Indonesia is included within OPEC until the suspension of its membership takes effect on Jan. 1, 2009.

OPEC quotas exclude condensate and natural gas liquids and apply to supply rather than wellhead output, defined to exclude movements to, but not sales from, storage. Saudi and Kuwaiti data includes Neutral Zone. Saudi data excludes oil produced for Bahrain. Venezuelan data includes upgraded synthetic oil.

OPEC exports to jump 540,000 bpd to Oct.11
Sept 25, 2008


OPEC oil exports, excluding Angola and Ecuador, will jump by 540,000 bpd in the
four weeks to Oct. 11, on strong Asian demand and seasonal factors, an analyst
who tracks future flows said on Thursday.

Seaborne crude exports from 11 OPEC members, including Iraq, will leap to 24.75 million bpd from 24.21 million bpd in the period to Sept. 13, British consultancy

The head of the consultancy, Roy Mason, said there was no evidence in the latest figures that OPEC had reined in output to comply with a Sept. 10 decision to trim output back to official targets.

"Everything is going East and it's a much bigger increase than we would
expect at this time of year. The rise to Asia is at a record high for
September," he said.

He said the jump could be partly explained by several big new refineries in China which are due to come on stream this year, as well as seasonal demand which picks up at the start of the fourth quarter.

"The refinery factor could argue the (rise) is a transient thing," Mason

The estimate follows a report from another leading analyst, Petrologistics, which showed production from the 13 members dropping 800,000 bpd through September.

OPEC oil output expected to drop
Sep 24, 2008

OPEC's oil supply is expected to fall sharply in September because of lower
output from members including Saudi Arabia and Iran, industry consultant Petrologistics said on Wednesday.

The estimate boosted oil prices and indicates that the Organization of the Petroleum Exporting Countries was starting to cut supplies even before it agreed on Sept. 10 to trim output back to official targets.

OPEC's 13 members are expected to pump 32.6 million barrels per day in September, down from a revised 33.4 million bpd in August when output was unusually high, Conrad Gerber, head of Petrologistics, told Reuters.

"Things have come back to normal," Gerber said. "This has nothing to do with the OPEC decision. That reduction will come later on."

Much of the cutback is coming from OPEC's two largest producers, Saudi Arabia and Iran, which supplied more oil than previously thought to customers in August.

Top exporter Saudi Arabia is expected to pump 9.55 million bpd in September, down from 9.7 million bpd in August. The kingdom raised output earlier in the year partly to quell what it saw as unacceptably high prices.

Iranian supply is forecast to decline to 4.05 million bpd from 4.4 million bpd in August. Its exports can vary month-to-month, affecting supply, while oilfield production remains steady.

The Petrologistics estimate suggests the 12 OPEC members bound by deals to set supply policy, all except Iraq, are producing 30.4 million bpd, more than their informal target of 29.67 million bpd.

OPEC at its meeting in Vienna on Sept. 9-10 adopted a lower target of 28.8 million bpd for 11 members, all except Indonesia, which will suspend its membership from Jan. 1, and Iraq.

Supply from Iraq is expected to decline by about 100,000 bpd to 2.2 million bpd in September due to rising domestic consumption and a slowdown in exports.

Militant attacks curbed output in Nigeria, which is expected to pump 1.8 million bpd, 140,000 bpd less than in August.

Petrologistics measures OPEC supply, which excludes oil produced but sent into storage, by tracking tanker shipments. OPEC itself does not issue timely estimates of its members' output.

October 3rd article: