OPEC-11 to Cut January Supply 5%, PetroLogistics Says

By Grant Smith

Jan. 23 (Bloomberg) -- OPEC will cut supplies by about 5 percent this month as the group implements production constraints announced in December, according to preliminary estimates from consultant PetroLogistics Ltd.

Oil supply from 11 members of the Organization of Petroleum Exporting Countries subject to quotas will average 26.15 million barrels a day in January, down from 27.65 million barrels a day, Conrad Gerber, the founder of PetroLogistics, said today by telephone from Geneva. From this month, members have a production quota of 24.845 million barrels a day. Iraq has no quota.

Saudi Arabia, the group’s largest member, led the cuts, lowering supply to 8.05 million barrels a day in January from 8.6 million a day last month, Gerber said. The kingdom’s new total is in line with its Jan. 1 quota.

“The latest OPEC supply data gives me confidence we’ll see a drawdown in inventories globally,” said Gareth Lewis-Davies, an analyst at Dresdner Kleinwort Group Ltd. in London. “The amount of OPEC supply reduction far exceeds the drop in demand.”

OPEC, responsible for about 41 percent of the world’s oil, agreed a record supply reduction at its last meeting on Dec. 17 as demand and prices collapsed. Crude futures traded around $43 a barrel in New York today, having lost more than $100 a barrel from an all-time high reached in July.

Iran, Nigeria

Iran reduced supplies to 3.83 million barrels a day this month from 3.85 million a day in December. Nigeria cut to 1.76 million barrels a day from 2.02 million. Venezuela lowered output to 1.97 million barrels a day from 2.22 million, and Angola trimmed to 1.84 million a day from 1.88 million, according to PetroLogistics.

Iraq, exempt from the quota system while its oil industry recovers from two wars, increased production to 2.45 million barrels a day from 2.43 million, the tanker tracker said.

Saudi Arabia will cut production by 300,000 barrels a day below the quota agreed on with OPEC to prop up prices, Algerian Oil Minister Chakib Khelil told state-run newspaper El Moudjahid earlier this week. OPEC is next due to meet on March 15 in Vienna.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net