Saudi curbs supply in anticipation of OPEC deal

Top oil exporter Saudi Arabia has pre-empted the outcome of an OPEC meeting next week by telling some of its biggest customers they will get significantly less crude in January, trade sources said on Wednesday.

One source said the cut from Saudi Arabia would be enough to take the kingdom's output below its implied OPEC target of 8.47 million barrels per day (bpd). Saudi Arabia pumped 8.92 million bpd in November, according to a survey by newswire Reuters.

"There are quite severe cuts - they are going to be seriously cutting back," a trader with one major customer said.

"The Saudis are definitely reducing further in January," another big buyer said.

Saudi officials have yet to comment publicly.

The reductions imply Saudi Arabia expects the meeting of the Organization of the Petroleum Exporting Countries on Dec. 17 in Algeria to agree a further cut in supplies.

Another output reduction would follow deals so far since September to remove around 2 million bpd from the market to prop up prices, which plunged from a record above $147 hit in July to just above $40 a barrel last week.

US crude strengthened on Wednesday following news of the Saudi cuts to trade at above $45 a barrel.

Prices had already firmed earlier this week after industry sources said Saudi Arabia would also deepen oil supply cuts to some of its Asian and smaller European customers next month.

OPEC supply policy agreements pertain to production, whereas allocations to customers relate to exports.

As the largest OPEC producer, Saudi Arabia holds the greatest stake in any output decision and was responsible for unilaterally increasing supplies to try to calm the market when oil prices were racing higher.

The kingdom's output climbed to around 9.65 million bpd in August. (Reuters)