OPEC Oil Production Falls in September, Survey Shows

Oct. 1 (Bloomberg) -- The Organization of Petroleum Exporting Countries trimmed production for a second consecutive month in September, as some members moved closer to production targets agreed to last year, a Bloomberg News survey showed.

Production averaged 28.395 million barrels a day last month, down 50,000 barrels from August, led by declines by Iraq, Saudi Arabia and Angola, according to the survey of oil companies, producers and analysts.

Excluding Iraq, which doesn’t have a quota or participate in output cuts implemented by the organization last year, the group’s production fell 10,000 barrels a day from the previous month to 26.045 million, 1.2 million more than the target.

“What it’s telling you is they’re pretty comfortable with this $65 to $75 price range,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “They’ve done a fantastic job of engineering it, primarily because the Gulf Cooperation Council countries are ready to sacrifice market share to get the price to where they want it to be.”

The GCC includes four OPEC members, Saudi Arabia, Kuwait, the United Arab Emirates and Qatar. Together, they are responsible for 74 percent of OPEC’s output reductions since 2008, based on the latest estimates. Saudi Arabia, Kuwait and Qatar were the only OPEC members to produce within their targets last month.

Oil has traded between $65 and $75 since July 31.

Crude Falls

Oil for November delivery rose 21 cents, or 0.3 percent, to settle at $70.82 a barrel at 2:54 p.m. on the New York Mercantile Exchange. Prices rose the most in almost six months yesterday, climbing $3.90, or 5.9 percent, to $70.61 a barrel. They have more than doubled from a four-year low of $32.40 a barrel reached at the end of last year.

OPEC members agreed in September 2008 that the 11 countries with quotas would trim output by 4.2 million barrels a day to 24.845 million. Oil ministers meeting last month in Vienna left the target unchanged on an expectation that the global economy would recover and keep demand and prices up.

The Vienna meeting marks the third time this year that OPEC decided against changing production levels. The group’s next gathering is Dec. 22 in Luanda, Angola.

Output cuts have left OPEC with 6.105 million barrels a day of spare capacity, the survey showed. Saudi Arabia can increase production by 2.785 million barrels, the most of any member.

Excess Capacity

Iraqi oil output fell 40,000 barrels to 2.35 million barrels a day in September, the biggest decline of any OPEC member, according to the survey.

Saudi Arabia, the world’s top oil exporter and OPEC’s biggest producer, pumped 8.015 million barrels of crude a day, down 25,000 barrels from the previous month. The decline was the biggest among the members participating in the output cuts. Production was 36,000 barrels a day below the kingdom’s quota of 8.051 million.

Kuwaiti output fell 15,000 barrels a day to 2.185 million, according to the survey. Output was 37,000 barrels a day lower than the country’s quota.

Qatar, the second-smallest producer in the group, pumped 720,000 barrels a day in September, down 3,000 barrels from August and 11,000 barrels below its target.

Exceeding Targets

The other eight OPEC members with quotas exceeded their production targets, which have been in place since Jan. 1. Nigeria and Venezuela had the biggest increases last month, followed by Iran and the United Arab Emirates.

Nigeria’s output rose 25,000 barrels a day to an average 1.805 million. The country exceeded its target by an average 132,000 barrels a day. The sweet, or low-sulfur, crude oil producer is recovering from summer supply disruptions amid an ongoing cease-fire by the country’s main rebel group, the Movement for the Emancipation of the Niger Delta, or MEND.

Venezuela also boosted production by 25,000 barrels a day to 2.23 million barrels. Its output was 244,000 above its target.

Iranian output rose 20,000 barrels a day to 3.78 million in September, the survey showed. The country, OPEC’s second-biggest producer, pumped an average 444,000 barrels a day above its target, the most of any member.

The UAE raised production by 20,000 barrels a day to 2.27 million barrels. That put it about 47,000 barrels a day above its output target.