Saudi Arabia Told OPEC It Cut Oil Output 408k b/d in Aug.
By Grant Smith Sep 10, 2014 11:25 AM CT 3 Comments Email Print
Saudi Arabia, the world’s biggest crude exporter, told OPEC that it cut production by 408,000 barrels a day in August, amid signs of a supply surplus that’s pushed prices to a 16-month low.
The kingdom produced 9.6 million barrels a day, compared with 10 million barrels daily in July, it said in a submission to the Organization of Petroleum Exporting Countries, according to the group’s monthly oil market report today. Data collected by Bloomberg News show no bigger monthly decline since December 2012. Other estimates collated by OPEC, based on what it calls secondary sources, show the nation cut output by 55,200 barrels to 9.86 million a day.
“It does illustrate a desire not to oversupply the market, and it does illustrate they are actively defending $100 a barrel,” Mike Wittner, head of oil market research at Societe Generale SA, said by phone from New York. “A good chunk of that 400,000 cut was probably in crude exports, which is clearly supportive of prices.”
Brent crude, a benchmark for more than half the world’s oil, fell below $100 a barrel this week as supplies from Libya rebounded, and amid speculation of an oversupply. Banks including Citigroup Inc. and UBS AG said the price decline would increase the chances of Saudi Arabia curbing supplies.
$100 Floor
“No switch gets flipped when the price goes from $100 to $99,” Societe Generale’s Wittner said. “It’s a soft floor. When they see a period of sustained weakness, and when there’s physical oversupply of light, sweet crude in the Atlantic basin, the Saudis are going to try and balance the market.”
OPEC reduced the outlook for demand for its crude next year by about 200,000 barrels a day, citing expanding supplies from nations outside the group and a weaker outlook for demand.
China’s manufacturing slowed more than estimated in August, according to data published Sept. 1, adding to weaker-than-anticipated credit, production and investment figures that suggested the economy was losing momentum. The government’s Purchasing Managers’ Index was at 51.1 for August, missing the median 51.2 estimate in a Bloomberg survey.
“It reflects the demand scenario we saw in August,” Miswin Mahesh, an analyst at Barclays Plc in London, said by phone of the Saudi reduction, adding that the country’s direct submissions are normally reliable. “Saudi Arabia continues to supply what’s called of them.”
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net James Herron, Rachel Graham