OPEC production reaches 11 month high

The Organization of Petroleum Exporting Countries increased crude-oil production in November to the highest level in 11 months as members took advantage of rising prices, a Bloomberg News survey showed.

Output averaged 28.9 million barrels a day last month, up 110,000 barrels from October, according to the survey of oil companies, producers and analysts.

Iraq, the only OPEC member without an output quota, was the sole member to cut production. Countries with quotas pumped 26.5 million barrels a day, 1.655 million above their target.

OPEC cut output quotas by 4.2 million barrels to 24.845 million barrels a day last year as fuel demand tumbled during the worst global recession since World War II. The group, which left the targets unchanged at a Sept. 9 meeting in Vienna, is set to gather again on Dec. 22 in Luanda, Angola.

Rick Mueller, director of oil markets at Energy Security Analysis Inc said: “OPEC is happy with where prices are right now, they are being prudent and slowly increasing output. They realize that if they overreacted and opened spigots too much, they could easily swamp the market.”

Oil prices have more than doubled from a four-year low of $32.40 a barrel touched in December 2008, which caused OPEC to make production curbs. Futures increased $1.31, or 1.7 percent, to $78.59 a barrel at 11:59 a.m. on the New York Mercantile Exchange.

“Production is creeping up month by month,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York. “Nine out of the 11 members with quotas increased production. They aren’t sticking to the deal they made, and this is going to make the market vulnerable.”

OPEC had 5.6 million barrels a day of spare capacity last month, down from 5.71 million in October, the survey showed. Saudi Arabia can increase daily output by 2.61 million barrels, the largest amount of any of the group’s producers.

Saudi Arabian production climbed the most of any member last month, followed by gains in Nigeria, Angola, Iran and Kuwait. Saudi production rose 40,000 barrels a day to 8.19 million barrels a day in November, pushing output 139,000 barrels above the kingdom’s quota.

“At some point the Saudis may say enough is enough,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “They have been doing the heavy lifting while some other members flagrantly ignore their quotas.”

Iran, OPEC’s second-biggest producer, increased output 15,000 barrels a day to 3.795 million last month, the report showed. The country pumped an average 459,000 barrels a day in excess of its target.

Kuwaiti output rose 15,000 barrels a day to 2.215 million. The country produced 7,000 barrels a day less than its quota, making Kuwait the only member to stay below its target.

Daily production in the United Arab Emirates, Qatar, Libya and Ecuador each increased by 10,000 barrels a day, the report showed. Venezuelan and Algerian output was unchanged from the prior month.

Iraqi oil output fell 50,000 barrels to 2.4 million barrels a day in November, according to the survey. A pipeline connecting the northern Iraqi city of Kirkuk with the Ceyhan oil export terminal in Turkey was shut Nov. 21 through Nov. 30 after an explosion, according to an official with Iraq’s North Oil Co.