Saudi Arabia to Keep October Crude Supplies Flat
Top oil exporter Saudi Arabia has told customers in Asia and Europe it will keep its crude supplies steady for October from September levels, backing expectations that an OPEC meeting on Tuesday will maintain supply curbs.
State oil firm Saudi Aramco informed buyers in monthly notices it would continue to supply Asian lifters with around 10% below their full contractual volume, as it has since April, industry sources in Japan and South Korea said on Monday.
It will also keep shipments steady to two European refiners, indicating the world's largest producer is keeping a lid on supply.
"If they're holding it steady, it probably means they're holding production steady. It's a sign that what the market is expecting from OPEC -- no rise in output -- is going to happen," said Tony Nunan, risk management executive at Tokyo-based Mitsubishi.
Most OPEC ministers held the line on Sunday that current output is enough to meet demand, though Saudi Arabia's oil minister declined to comment, after a report by consultancy PFC Energy saying Saudi sources signalled OPEC may need to consider an output boost of up to 1 million barrels per day (bpd).
More than half of Saudi Arabia's crude heads to Asia. In 2006, the kingdom shipped 51.6% of its crude exports to the region.
European refiners confirmed Saudi supplies were unchanged for October. "They have maintained the volume," one European refiner said.
Saudi Arabia has the bulk of the Organization of the Petroleum Exporting Countries' spare production capacity and is key to any decision to increase output.
Saudi Arabia and other OPEC members have lowered output since last year, following deals to remove 1.7 million bpd, or about 6% of supply, from the market.
But oil's rally to above $76 a barrel, near a record high of $78.77 hit on Aug. 1, has led consumer nations to urge OPEC to increase output.
The International Energy Agency, which represents industrialised consumer nations, forecasts their crude oil stocks will fall to the bottom of the five-year average range by January, unless OPEC pumps more crude oil, and fast.
But uncertainty over the U.S. economy has cast doubt over oil demand growth in the world's top consumer.
There is concern that credit turmoil stemming from U.S. subprime loans -- risky mortgages -- might hit the real economy.