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OPEC’s January production is likely to come in lower than anticipated, a former Saudi Aramco executive said in a statement to CNBC on Thursday.
The oil cartel 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. But 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 bpd—that’s in addition to its allies who promised to cut 400,000 bpd.
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 bpd in promised cuts would not quell the market unrest. 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.
Then news came in that 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. Oil prices were up late on Thursday afternoon after the bullish media reports, with WTI trading up 1.22% per barrel at $47.11, with Brent trading up 1.78% at $55.89 per barrel.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.