OPEC oil output dropped less than 1 percent in December, the first month after the group refused to cut production in response to a rout in oil prices, a Bloomberg survey showed.
Output by the 12-member Organization of Petroleum Exporting Countries slipped 122,000 barrels a day, or 0.4 percent, to 30.239 million, led by declines in Saudi Arabia, Libya and the United Arab Emirates, according to the survey of oil companies, producers and analysts.
Brent and West Texas Intermediate futures dropped this week to the lowest levels since May 2009, capping the worst year since 2008. OPEC left its production quotas unchanged at a Nov. 27 meeting in Vienna, prompting speculation that the group will let crude slide low enough to slow U.S. production that’s climbed to the highest level in three decades.
“Ultimately the big producers will make significant cuts to support prices,” Dan Heckman, Kansas City, Mo.-based national investment consultant at U.S. Bank Wealth Management, said by phone. His firm oversees about $120 billion. “It will take time to work off this huge supply glut.”
Saudi Arabia trimmed output by 150,000 barrels a day to average 9.5 million this month, the biggest decline. The 300,000-barrel-a-day Khafji offshore fields in the Saudi Arabian-Kuwaiti neutral zone were shut Oct. 16 because of environmental concerns. Asian demand for Saudi crude is weak, sources said.
“For a long time OPEC, in particular the Saudis, has been the swing producer,” Adam Wise, who helps run a $6 billion oil and gas bond portfolio as a managing director at John Hancock in Boston, said by phone. “They would cut production when prices were heading too low. This isn’t a role they want to perform anymore.”