OPEC member Qatar expects to lower oil output to about 500,000 barrels per day (bpd) by the end of November from 650,000 at the end of last month and from 800,000 bpd a month earlier, an industry source familiar with the matter said.
The reduction to 650,000 bpd was decided because of market oversupply, with the second reduction to 500,000 made necessary by refinery maintenance, the source said. Qatar's maximum production capacity is 800,000 bpd. "The market is oversupplied and this is why we cut down in October. We found that there's generally less demand," the source said. With maintenance due at Qatar's Mesaieed refinery, production is expected to drop to around 500,000 bpd.
Despite rising world demand, OPEC expects demand for its oil to fall in 2015 as higher supply outside the group, particularly in the United States due to shale energy production, squeezes OPEC's market share. Qatar appears to be the only Gulf OPEC state that has started informally to cut output ahead of an OPEC meeting due on Nov. 27 in Vienna. "News of any OPEC member or in particular any Gulf OPEC member cutting production ahead of the meeting is positive news for the market," Mohamed al-Shatti a Kuwaiti market observer told Al-Arabiya television channel when asked about Qatar's cut.
Qatar told OPEC that its production averaged 680,000 bpd in October, down from 690,000 bpd in September and 734,000 bpd in August, according to figures in OPEC's monthly market report, published on Wednesday. Unlike other OPEC states, Qatar is more flexible in cutting its crude production since its capacity is relatively small and it remains the world's largest LNG exporter. Saudi Arabia's Oil Minister Ali al-Naimi on Wednesday reaffirmed the kingdom's longstanding policy of seeking stable global markets, dismissing talk of a "price war" but offering no insight on his response to tumbling crude prices, or what OPEC will decide later this month.
OPEC members including Kuwait have said a cut in output at the OPEC meeting is unlikely, but privately delegates are starting to talk of the need for some action, although they warn an agreement will not be easy to reach.