The Organization of Petroleum Exporting Countries, OPEC, is preparing to implement another round of oil cuts beginning February first, satisfied with its decision to cut supply by 6% that has helped restore market balance.
OPEC which pumps over a third of the world's oil is currently cutting supplies in two steps: 1.2 million barrels a day since last November and half a million bpd beginning next Thursday February first. The target output for the ten members is expected to fall to 25.8 million bpd. According to the Vienna based cartel, member countries delivered 63% or 758.000 bpd of the agreed cuts in December with the world's biggest exporter Saudi Arabia taking the lead. "The ministers see reasonably good compliance with the first round of cuts and are expecting at least the same kind of compliance in February" said an OPEC source. Earlier this month Saudi Oil Minister Ali Al-Naimi said that "the measures are working well. Inventories in the fourth quarter have come down...which puts the market closer to balance." Having hit an all-time high of almost 80 US dollars a barrel in July, when fighting flared in Lebanon oil tumbled below 50 US dollars on January 18 because of the mild northern winter and a shift in speculative investments. This week oil prices settled in the range of 50 to 55 US dollars a barrel, well down on July's peak but far above the 20 US dollars at the beginning of 2002. As OPEC approaches its March 15 meeting, members hold the view that the current supply cuts will be enough to ensure the 85 million bpd global oil market remains in balance through the second quarter, when demand normally slackens. But with new OPEC member Angola expected to ship a record 1.6 million barrels a day in March, analysts say OPEC efforts to restrict supplies could be frustrated. Crude shipments from the second largest producer in sub-Saharan Africa are expected to rise by 100,000 bpd from February because of a ramp up in a new offshore field.