Oil firm notifies customers of cut in contracted volumes in November and December by 5%.
Abu Dhabi National Oil Co. (ADNOC) has notified its term customers that it will cut its contracted volumes for Upper Zakum crude oil in November and December by five percent, the company said via a fax on Monday.
ADNOC will also reduce allocations for the distillate-rich Murban crude by 15 percent in December, and it will lower supply for Lower Zakum by 10 percent for the same month.
The OPEC producer will also cut supplies of Umm Shaif in December by 5 percent.
November allocations of all the crudes except Upper Zakum will remain unchanged.
The Organisation of the Petroleum Exporting Countries (OPEC) agreed on Friday at an emergency meeting to slash production levels by 1.5 million barrels per day (bpd). The cut was initiated to stem a more than 50 percent slide in prices.
Most traders said they had expected reductions for all crudes in November as well.
"We were expecting ADNOC to cut supplies on the other grades for November as well, not just December," a Singapore-based crude oil trader with a Western trading house said.
The bigger than expected cuts for Murban and Lower Zakum also took the market by surprise, traders and refiners said.
"This is a pretty hefty cut, we had initially been expecting something in the range of say 5, maybe 10 percent," an Asian refining source said.
"It shows the OPEC countries are serious about trying to stabilise oil prices and sticking to making cuts as agreed."
ADNOC, the main oil producer for the United Arab Emirates, usually notifies its Asian lifters about their supplies by the end of the month.
Traders said they were still waiting on Saudi Arabia, OPEC's biggest exporter to inform them of supply cuts.
Saudi Arabia, which sells just over half of its estimated 7 million bpd of crude exports to Asia, is expected to cut production by 466,000 bpd under last week's OPEC's agreement.
The kingdom, which normally informs its customers how much crude it will sell them by the middle of the preceeding month, has been supplying Asian refiners with their full contracted volume since late last year.
The UAE, which sells nearly all its crude to Asia, should cut 134,000 bpd. (Reuters)