OPEC Output Falls From a 14-Month High, Survey Shows

By Karyn Peterson and Mark Shenk

Output fell 30,000 barrels a day, or 0.1 percent, to an average 29.205 million barrels a day, according to the survey of oil companies, producers and analysts. Members with production quotas, all except Iraq, raised output by 55,000 barrels to 26.84 million barrels a day, the highest level since December 2008 and 1.995 million above their target.

OPEC cut its quotas by 4.2 million barrels to 24.845 million barrels a day beginning in January 2009 as fuel demand tumbled during the worst recession since World War II. The group left the targets unchanged at a meeting March 17 in Vienna.

“With oil near $82 it’s going to be hard to get them to cut back by much,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.

Compliance among the 11 members with output quotas fell to 53 percent in March from 54 percent in February. All members exceeded their production limits. Last month’s total for all members was the highest since December 2008.

Crude oil has risen 15 percent since the end of January to $83.76 a barrel on the New York Mercantile Exchange. Today’s settlement was the highest since Oct. 9, 2008.

‘Gradual Erosion’

“OPEC gets nervous when prices look like they are heading to $85 a barrel,” said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “They won’t hesitate to put more oil on the market if they believe prices will go much higher. We’re seeing a gradual erosion in quota discipline.”

Iraqi output dropped 85,000 barrels a day to 2.365 million in March, the biggest decrease in OPEC. February production was revised 65,000 barrels a day higher.

Nigeria’s production rose 70,000 barrels to 2.01 million barrels a day, the largest increase in the group. Africa’s biggest oil producer exceeded its target by 337,000 barrels a day. Attacks by the Movement for the Emancipation of the Niger Delta and other armed groups on Nigeria’s oil industry have cut the nation’s exports by more than 20 percent since 2006.

“Neither Nigeria nor Iraq is a stable, safe, country,” Mueller said. “It’s no surprise that their production figures are erratic.”

Saudi Reduction

Saudi Arabia, OPEC’s biggest producer, lowered output by 50,000 barrels to 8.2 million barrels a day, the second-biggest reduction in the group. The kingdom exceeded its quota by 149,000 barrels a day.

Algeria, Angola and Venezuela each curbed output by 10,000 barrels a day, the survey showed. Venezuelan production slipped to 2.19 million barrels a day in March.

Production in Iran, OPEC’s second-biggest producer, increased 30,000 barrels a day to 3.825 million, the highest level since December 2008. The country is the biggest overproducer in the group, exceeding its quota by 489,000 barrels a day.

The United Arab Emirates, OPEC’s fourth-largest producer, bolstered output by 20,000 barrels to 2.3 million barrels a day, putting the country 77,000 barrels a day above its target. It was the third-biggest gain after Nigeria and Iran.

--Editors: Joe Link, Charlotte Porter

To contact the reporters on this story: Mark Shenk and Karyn Peterson in New York at mshenk1@bloomberg.net.

To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net