Abu Dhabi National Oil Company (ADNOC) has served notice of a further cut in oil shipments in February, suggesting the state petroleum company expects oil demand to weaken in the second quarter, when the crude would be delivered to customers in the Asia Pacific region. Seasonal oil demand is typically at its weakest in the second quarter, which has prompted some analysts to predict that OPEC will tighten crude supplies early next year to prevent a further build-up of global inventories. "OPEC could face the prospects of needing to undertake Herculean efforts to tighten up fundamentals in early 2010," the consulting firm PFC Energy said in a recent report.
ADNOC said it would cut output of its most prolific crude oil grade, Murban, by 13 per cent from normal volumes, compared with a 10 per cent cut announced for next month. It announced 15 per cent February cuts for Lower Zakum and Umm Shaif crude and 10 per cent for oil pumped from the Upper Zakum field. The corresponding January cuts were 10 per cent for Lower Zakum and Umm Shaif and 20 per cent for Upper Zakum.
ADNOC does not regularly publish production figures, but in 2007 it put its output capacity for Murban crude at 1.5 million barrels per day (bpd) and said it could pump 600,000 bpd from each of the other three fields. Based on those figures, its proposed January and February output cuts amount to 390,000 bpd and 435,000 bpd respectively, or 13 per cent and 15 per cent respectively of the UAE's total oil production capacity of about 2.85 million bpd.
OPEC might be forced to further reduce its output later this year, PFC said in its report. "Most likely the organisation would need to agree to substantial cuts - of 1 million bpd of more from actual production - in early 2010 in order to bring total inventories down to manageable levels." The oil exporters' organisation left its output target unchanged at its most recent meeting last Tuesday in Luanda, the Angolan capital. Its next meeting is scheduled for March 17 in Vienna.