Tags: OPEC | Crude | Demand | Record | oil | gasoline

OPEC Pumps More Crude as Demand to Hit Record

Thursday, 10 Feb 2011 11:44 AM

OPEC reported it has boosted its oil output to a two-year high, encouraged by rising global demand and prices above $100 a barrel, while the industrialized world's energy adviser said the increase may limit price gains.

In a monthly report on Thursday, the Organization of the Petroleum Exporting Countries said its January production rose by 400,000 barrels per day (bpd) to 29.72 million bpd, the highest since December 2008 when the group announced a record production cut.

The rally in oil prices has caused concern in consuming countries about the impact of rising energy costs on inflation and economic growth.

OPEC, led by Saudi Arabia, is the only immediate source of extra oil should the world's fuel needs surpass expectations, as they did in 2010.

The International Energy Agency (IEA), an adviser to 28 industrialized countries, said in its monthly report the extra OPEC supplies should help to limit a further spike in oil prices even though global demand is expected to hit a record this year.

"We are seeing a little more oil from OPEC as they're seeing the same indicators on the demand side, especially in Asia, that we are. A flexible attitude from OPEC is a good thing," David Fyfe, head of the IEA's oil industry and markets division, said in an interview.

"The fact that prices have gone up from around $75 in September to $95 a barrel and above is because of a sharp tightening in the physical market," he said.

"It's not the only thing driving prices but some of the impetus comes from that market tightening. We saw very strong 2010 oil demand growth and we're feeding that through into 2011," he said.

Both the IEA and OPEC said the world would use more oil this year than previously expected. The IEA said global consumption would exceed 90 million bpd in late 2011 for the first time.

Oil prices traded lower on Thursday, with Brent crude falling almost $1 to around $101.

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The higher production figure from OPEC is a de-facto acknowledgement of a rise in OPEC supplies reported by the IEA a month ago that was initially challenged by the producer group.

The IEA was founded in 1973-1974 as a counterweight to OPEC after the Arab oil embargo, which sent prices soaring. The two have clashed this year over the causes of the oil price rally and the need for OPEC to pump more oil.

Last month, the IEA said Saudi Arabia had stealthily boosted output to cool the market, but OPEC's Secretary General Abdullah al-Badri said Saudi Arabia had told OPEC it had not opened its taps.

On Thursday, OPEC said the biggest contribution to the increase in supply last month came from Iraq, where foreign oil companies are working to expand output. It also said Saudi Arabia and the United Arab Emirates raised production.

The IEA said Saudi Arabia's oil output was flat in January at 8.6 million bpd, after rising last year, with Angola, Libya, the UAE and Venezuela slightly raising production and Iran and Nigeria cutting output.

OPEC has not changed its official production target since the December 2008 cut in the aftermath of the financial crisis. It is not scheduled to meet to review output policy until June.

The latest set of production figures show, however, that OPEC members are continuing a trend begun in mid-2009 to informally raise output in response to higher demand and prices.

OPEC's production figures are based on secondary sources and are the closest thing OPEC provides to an official estimate of supplies. Many OPEC countries do not disclose their production on a timely basis.

The secondary sources include consultants and news organizations, which use methods such as tracking exports and estimating domestic consumption to work out how much oil OPEC is pumping.

© 2017 Thomson/Reuters. All rights reserved.

 
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OPEC reported it has boosted its oil output to a two-year high, encouraged by rising global demand and prices above $100 a barrel, while the industrialized world's energy adviser said the increase may limit price gains. In a monthly report on Thursday, the Organization of...
OPEC,Crude,Demand,Record,oil,gasoline
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Thursday, 10 Feb 2011 11:44 AM
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