According to Bloomberg News in London, OPEC’s output fell the most in nearly two years last month before an agreement was reached to cut oil supply.
Bloomberg’s survey of officials, analysts and ship tracking data showed that the cartel felt a sense of urgency as crude oil prices plunged, with Saudi Arabia, its main member, limiting production. The group’s agreement to limit production began only this week.
Last month, OPEC’s oil production fell by 530,000 barrels a day to 32.6 million barrels a day. This was the sharpest pullback since January 2017, when the group began implementing its strategy for the first time to eliminate the oversupply caused by the increased supply of shale oil in the United States.
A global coalition of oil producers, OPEC+, made up of members of the organization and other exporters, including Russia, agreed on Dec. 7 to cut production in the first six months of 2019. However, instead of rebounding, crude oil prices fell to their lowest level in more than a year.
Investors remain concerned that the OPEC + cut is not enough to make way for another surge in supply expected by U.S. shale drillers.
Phil Flynn, market analyst at Price Futures Group, said: “Concerns about the economic slowdown”put more pressure on OPEC to stabilize the oil market, so let the cuts begin.”
Saudi Arabia last month cut its daily production by 42,000 barrels to 10.65 million barrels, from a record level slightly higher than 11 million barrels in November. Energy Minister Fallich has promised to cut production further this month, beyond the cuts that the country has signed.