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OPEC Pumps Least Crude in More Than 2 Years as
Saudi Cuts

By Lananh Nguyen - Dec 10, 2013


OPEC reduced crude production in November to the lowest level in more than two years as
output dropped below the organization's 30 million barrel-a-day ceiling for a third month.


The Organization of Petroleum Exporting Countries pumped 29.63 million barrels last month
compared with 29.83 million in October, OPEC said in its monthly oil market report today,
citing data from secondary sources. That's the lowest since May 2011. The group decided to
maintain its output limit of 30 million at a meeting in Vienna last week because members
were"all satisfied," Ali al-Naimi, Saudi Arabia's oil minister, told reporters on Dec. 4.


"In taking this decision, member countries reconfirmed their readiness to promptly respond to
unforeseen developments that could have an adverse impact on an orderly and balanced oil
market," OPEC said in today's report.


Analysts at banks including BNP Paribas SA, Citigroup Inc. and Deutsche Bank AG predict that
some members of OPEC, notably Saudi Arabia, will probably need to reduce output in 2014 to
prevent a global glut. The U.S. is producing the most oil in a quarter-century, while Iraq, Libya
and Iran have said they plan to increase exports in the next several months.


Libyan Ports
Today's OPEC report was published before the head ofLibya's Petroleum Facilities Guard,
Brigadier Idris Bukhamada, said that three oil ports in eastern Libya will reopen on Dec. 15. The
Al Magharba tribe, which held a meeting today, forced former PFG leaders to lift their blockade,
Bukhamada said by phone from Ajdabiya. The ports, including Es Sider, the largest, had been
closed since late July.


Output from Saudi Arabia, OPEC's biggest producer, fell to a five-month low of 9.63 million
barrels a day last month from 9.71 million in October, according to OPEC's monthly report.
Production also dropped in Libya, Nigeria, the United Arab Emirates, Algeria, and Kuwait, while
supplies climbed in Iraq, Iran, and Angola.


"Downside risks to the oil price may require OPEC to cut production to defend oil prices,"
Michael Lewis, head of commodities research at Deutsche Bank in London, said in an e-mailed
report today. "Given our upbeat outlook for world growth we would view any attempt by OPEC
to defend the oil price as likely to be successful."


Brent crude for delivery in January fell 17 cents to $109.22 a barrel at 1:49 p.m. in London on
the ICE Futures Europe exchange, after rising as much as $1.06 earlier today, before the news on
Libyan ports emerged. The North Sea grade, which is the benchmark for more than half the
world's oil, has dropped 1.7 percent in 2013.


Spread Narrows
OPEC has pumped below its 30 million barrel-a-day target since September, reports for this
month and last showed.


The spread between U.S. West Texas Intermediate and Brent crudes will narrow in the coming
year, according to the group."As additional pipeline capacity to the U.S. Gulf coast becomes
available," a glut will ease at WTI's delivery point in Cushing, Oklahoma, OPEC said. The gap
traded at about $10.81 a barrel today after narrowing from $19.01 on Nov. 27, the widest on a
closing basis in eight months.


World oil consumption is expected to gain by 1 million barrels a day next year to 90.84 million
barrels, according to the report, little changed from last month's estimate. Demand for OPEC's
crude is forecast to drop to 29.6 million barrels a day, or a decline of 300,000 barrels from this
year.


Production from nations outside of OPEC will increase 1.2 million barrels a day next year to
average 55.32 million barrels a day, with gains from the U.S., Canada and Russia, OPEC said.
That's little changed from last month's estimate.


The International Energy Agency, the Paris-based adviser to oil-consuming nations, will release
its monthly report tomorrow.


OPEC's 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar,
Saudi Arabia, the U.A.E. and Venezuela.


To contact the reporter on this story: Lananh Nguyen in London at lnguyen35(&bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev(&,bloomberg.net
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