Crude climbed above $36 a barrel today after the UAE joined Saudi Arabia in deepening oil supply curbs to comply with Opec’s biggest-ever output cut last week as it told refiners it would stiffen shipping limits on exports of its main grades.
‘Crude for February delivery was trading up 82 cents at $36.17 a barrel by 0203 GMT. After settling down 9.3%, or $3.63, on Wednesday, not far off the more than 4.5 year low struck a week ago. London Brent crude was up 75 cents at $37.36, after settling down $3.75 on Wednesday. Markets were closed yesterday for Christmas Day. Crude prices have dropped about $110 a barrel since their mid-July peak as the global financial crisis chipped away at fuel demand, spurring Opec producers to cut 5% of global crude production to stem the slide. The Abu Dhabi National Oil Company (ADNOC), the main producer in the United Arab Emirates, the world’s fifth-largest crude exporter, will continue to supply its customers of flagship Murban crude with 15% less than normal contractual supplies in January, while Upper Zakum supplies will be reduced by 3% from the norm. ADNOC said it will reduce supplies of all four crude grades for February, the deepest supply cuts since it started cutting allocations in November. A source with an Asian refiner said the ADNOC cuts were more than expected. “ADNOC had already allocated January volumes, but they reversed the decision, so that messes up our schedule,” the source said. “For February, the reduction volumes are very large, so we may need to adjust our ship loadings.” Analysts and refiners said the notice was hard evidence that one of Opec’s core members was implementing its share of the group’s agreed 2.2 million barrel per day production cut, giving relief to a crude price that had been undermined by worries about adherence to Opec’s cuts.