OPEC output last month staged a minor recovery from the 14-month lows registered in December, MEES estimates show. But basket prices, which late January ratcheted above $110/B, would indicate demand this quarter has not fallen as fast as anticipated. A resurgence in economic optimism and market nerves catalyzed by the 16 January massacre at Algeria’s In Amenas gas facility go part of the way to explain recent price buoyancy, but there is also a clear signal the market needs additional OPEC crude.
Saudi output for the last three months has averaged some 700,000 b/d below Jan-Oct 2012 levels of 9.8mn b/d. Riyadh repeatedly stresses that it adjusts production levels solely in response to customer demand. But demand is clearly influenced by price. And Saudi March Official Selling Prices (OSPs), issued early this month, delivered greater-than-anticipated cuts to Asia-bound cargoes (see p17), in what would appear to be a tacit admission that prices needed cutting. While a month ago, it was westbound sailings that were taking the brunt of Mideast Gulf export cuts (MEES, 25 January), the latest data from tanker tracker Oil Movements show eastbound Mideast sailings tumbling – estimates for mid-February are some 1mn b/d lower than two months earlier – underlining a need to stimulate Asian demand. (CONTINUED - 937 WORDS)