OPEC Raised Oil Output for the First Time Since July (Update2)

May 13 (Bloomberg) -- The Organization of Petroleum Exporting Countries boosted oil production last month for the first time since July, exceeding its quota by 967,000 barrels a day and backtracking its implementation of supply cuts intended to stem falling prices.

The 11 OPEC members bound by targets implemented 77 percent of planned output cuts of 4.2 million barrels a day, down from a revised 82 percent for March, the Vienna-based organization said in a monthly report today.

Those 11 nations, which exclude Iraq, pumped 25.812 million barrels a day in April, the report said, citing secondary sources, which include estimates from analysts and news organizations. That compares with 25.587 million a day in March. Those 11 nations have a target of 24.845 million barrels a day that took effect from Jan. 1.

“There is too much revenue on the table to not produce” as crude prices rise, said Paul Tossetti, director of oil market analysis at PFC Energy in Washington. “This is as far as we will see the cuts come.”

Most OPEC nations boosted output during April as oil prices increased to average about $50 a barrel for the month. Crude oil for June delivery traded at $58.67 a barrel on the New York Mercantile Exchange at 2:27 p.m. London time today, having steadily risen from a five-year settlement low of $33.87 on Dec. 19 as the group’s earlier supply cuts took effect.

Supply Overhang

“Prices have remained above $50 a barrel due more to market sentiment than fundamentals,” the monthly OPEC report said. “Considerable risks remain as oil market fundamentals are far from balanced due to the persistent contraction in demand and growing supply overhang.”

Saudi Arabia, the world’s biggest oil exporter and still the only member to be producing under its target allocation, increased daily output by 20,500 barrels to 7.913 million barrels in April. Its individual quota is 8.051 million barrels a day.

Iran, Angola and Venezuela exceeded their quotas the most. Iran pumped 3.75 million barrels a day last month, more than 400,000 barrels a day above its official ceiling of 3.336 million. Venezuela supplied 2.15 million a day, above its OPEC target of 1.986 million a day.

Angola Production

Angola produced 1.715 million barrels a day, compared with its target of 1.517 million. The country claims its production quota is higher than the figure assumed by secondary sources, and OPEC itself has declined to clarify the discrepancy by refusing to publish individual country quotas.

OPEC meets in Vienna on May 28 to decide oil output policy. At its last summit on March 15 the group decided to leave quotas unchanged as it implemented its existing commitment to restrict supply and as the global recession deepened.

“There is no basis for further cuts when you look at the numbers and oil prices,” said Paul Horsnell, head of commodities research at Barclays Capital in London. “With prices coming closer into the target range by the end of the year, you ask when will they be bringing oil back into the market -- it is too early to talk about increasing output yet, but it isn’t too early to think about the timing of it.”

Iraq is the only OPEC member not bound by quotas. The monthly OPEC report also revised lower the group’s estimate of world oil demand for a ninth consecutive month.