"This is nowhere near the amount of cuts needed if OPEC wishes to balance the market, and OPEC knows it," said Platts Global Director of Oil John Kingston. "That's why they were willing in December to make further cuts to production. Outside of the price, the most important number to watch in coming weeks is OPEC's actual production in January."
Production from the 11 members bound by OPEC output agreements - excluding Iraq, which is not subject to production pacts as it tries to rebuild its sanctions- and war-ravaged oil industry - fell by 650,000 b/d to 27.51 million b/d from November's estimated 28.16 million b/d.
This left the OPEC-11 exceeding their 27.308 million b/d ceiling by around 200,000 b/d in December. That ceiling has now been superseded by a new output limit of 24.845 million b/d, agreed at OPEC's December 17 meeting in Algeria, which came into effect at the beginning of January.
Most OPEC members reduced output, with the biggest single cut coming from Saudi Arabia, whose production was estimated to have fallen to 8.37 million b/d in December from 8.9 million b/d in November. Other reductions ranged between 10,000 b/d and 40,000 b/d.
Combined reductions totaling 710,000 b/d were partly offset by 70,000 b/d in increases from Angola, Iraq and Nigeria. Ecuadoran production was seen largely unchanged near 500,000 b/d.