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OPEC’s oil output fell by 300,000 barrels per day in November, giving the bloc its lowest production rate since May, according to a new Reuters survey.
Cuts in Angola and Iraq caused most of the drop, which was bolstered by strong compliance to the output reduction deal ahead of an agreement to extend it through the end of 2018.
Compliance has now hit 112 percent, compared to 92 percent in October. All but three OPEC nations pumped oil at a rate lower than their assigned quotas. Ecuador, Gabon and the United Arab Emirates were the three holdouts, but all three are tiny producers compared to Saudi Arabia, Iraq and Iran.
“Based on the recent past we can start the New Year with relative optimism as far as conformity is concerned,” Tamas Varga of oil broker PVM told Reuters. “The outcome of last Thursday’s meeting looks constructive.”
In Vienna, OPEC agreed to continue reduced production, in hopes of continuing the oil price rebound to a higher level. OPEC and Russia-led non-OPEC oil producers left any ‘exit strategy’ talk out of their agreement last week, but Saudi Arabia’s Energy Minister Khalid al-Falih recently fed the market some hints about what OPEC would do after the cuts.
Unless sudden oil market developments occur, OPEC is expected to continue sticking to the production cuts until the end of next year, and “we will not alter our course in the second half of the year,” al-Falih said at a news conference in Riyadh on Monday.
“However, we think that the outlook for when we will hit the balanced market will be clearer in June, and we will start thinking of what do we do in 2019,” the most powerful oil minister at OPEC said, as carried by Reuters.
“The intent is not overnight to open the taps and flood the market,” Bloomberg quoted al-Falih as saying.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…