Economics & Business

Oil rises above $36, UAE cuts supplies

LONDON: Oil rose above $36 a barrel on Friday after the United Arab Emirates joined leading exporter Saudi Arabia in deepening supply curbs in line with OPEC’s biggest ever output cut announced last week. U.S. crude gained $1.01 to $36.36 a barrel by 1219 GMT, off a session high of $36.90while, London Brent rose 94 cents to $37.55. “The only positive news (for the market) came from the UAE,” Olivier Jakob of Petromatrix wrote in a report. “For now at least, Saudi Arabia and the UAE seem to be fully complying with the cuts.”

Abu Dhabi National Oil Co
(ADNOC), the main producer in the UAE, the world’s fifth-largest oil exporter, said it would cut supplies of February Murban and Upper Zakum allocations by 15 percent and Lower Zakum and Umm Shaif by 10 percent each.

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.”

The allocations follow a decision last week by the Organization of the Petroleum Exporting Countries to reduce supplies by 2.2 million barrels per day. Saudi Arabia informed its customers even before the OPEC meeting they would be receiving less oil.

The OPEC reduction is its deepest ever as the producer group battles a market slump that has sliced around $110 off the price since a July peak above $147 a barrel. Japan’s deepening recession is expected to cut oil demand in the world’s third-biggest oil consumer after the United States and China, by almost 5 percent in the year starting April. Consumption was also seen sliding by 5.7 percent in the fiscal year ending next March, the Institute of Energy Economics, Japan, said this week.-SANA

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Noreen Gill

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