Saudi Arabia, the largest crude producer in OPEC, plans to keep output steady until the end of the year, a person with knowledge of the country’s oil policy said. It made the biggest cut in 20 months in August.
Output through the end of the year won’t differ much from August, when the country pumped 9.597 million barrels a day, according to the person, who isn’t allowed to be identified. The nation reduced production by 408,500 barrels a day last month, the most since December 2012, according to its most-recent submission to the Organization of Petroleum Exporting Countries. Demand will rise by the end of the year because of northern hemisphere winter, the person said.
Oil demand growth was the weakest since 2012 in the second quarter and industrialized nations’ stockpiles in August rose by more than twice the normal amount for the time of year, according to the International Energy Agency. Brent, the world’s most-active crude contract, is close to a two-year low. OPEC may cut its output target next year, the group’s secretary general said Sept. 16.
“It does make sense, even though prices are falling,” Gareth Lewis-Davies, a senior energy strategist at BNP Paribas SA, said by phone from London. “Globally, demand for crude is set to increase on a seasonal basis and as new refineries in the Middle East and China ramp up. If the Saudis cut, they would lose market share and that’s always a concern because it’s difficult to get it back.”
Brent for November settlement is heading for a weekly loss this week, falling 1.4 percent since Sept. 19 to $96.97 a barrel at 11:11 a.m. in London on the ICE Futures Europe exchange.
OPEC’s daily output target could fall by 500,000 barrels to 29.5 million barrels in 2015, Abdalla El-Badri, the group’s secretary general, said at its secretariat in Vienna on Sept. 16. OPEC’s monthly report on Sept. 10 showed demand for its oil will drop to 29.2 million barrels a day in 2015 from 29.5 million this year.
Oil inventories in developed countries probably rose by 19.2 million barrels in August, the IEA said on Sept. 11. Second-quarter demand growth fell to 480,000 barrels day, compared with a year earlier, the first time in about two years that it’s been below 500,000 barrels a day, the IEA said.
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