The OPEC cartel increased crude production to the highest level in 11 months as member countries took advantage of the rise in prices to raise some extra cash. OPEC output jumped to 28.9 mbpd for a gain of 110,000 bpd over October.
Iraq is the only OPEC member without any quota and they were the only country to cut production. Iraq is still fighting broken down pipelines and infrastructure and they have trouble maintaining day to day production. Iraqi oil output fell 50,000 bpd in November. Countries with quotas pumped 26.5 mbpd, 1.655 million over their official targets.
OPEC cut quotas by 4.2 mbpd to 24.845 mbpd back in 2008 as the recession crushed demand for oil products. When OPEC last met on Sept-9th they left quotas the same. They are scheduled to meet again on Dec-22nd in Luanda, Angola.
OPEC is happy with prices over $75. They perceive that as a fair value for oil at this time. They would like to get more and that is why they are not opening the spigots full throttle. They don't want to flood the market and pressure prices. OPEC budgets were crushed when oil prices fell to a four-year low at $32.40 on Dec-8th. They don't want to go through that pain again.
The Iranian Oil Minister told reporters on Tuesday that given the circumstances he did not believe that OPEC members would vote for a production increase at the December meeting. The minister urged OPEC to work to stabilize prices rather than reduce prices by increasing production. OPEC president Jose Maria Botelho de Vasconcelos of Angola said last week that a price from $75 to $80 was satisfactory. Until prices go much higher over that level I would not look for any quota hikes. Just saying quota hike would probably pressure prices.
Even Venezuela is expected to recommend no quota hikes. Of course they can't meet their quota anyway so anything that pressures prices is negative for them.
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