The oil market should prepare for a bullish surprise from OPEC in January, according to a former Saudi Aramco executive
The 14-member oil producer group will likely deliver a deeper output cut in January than it promised last month, said Sadad al-Husseini, founder of Husseini Energy. Market analysts could see OPEC production fall by about 1 million barrels per day from October levels this month, Husseini said.
Last month, OPEC agreed to take 800,000 bpd off the market. Pledges from 10 other producers aligned with OPEC, including Russia, brought total output cuts to 1.2 million bpd.
"It's working very well," Husseini told CNBC's "Squawk on the Street" on Thursday. "There's already been a significant drop in OPEC production and it's continuing on target to come down to about 32 [million] and 100,000 barrels in January."
OPEC pumped just under 33 million bpd in October, the month that serves as the benchmark for production cuts. If Husseini's forecast is correct and OPEC pumps roughly 32.1 million bpd in January, it would equal a reduction of 876,000 bpd.
But Husseini said it's possible that OPEC cuts more than 1 million bpd by the end of January, and the group could potentially throttle back output by nearly 1.2 million bpd, essentially doing the work of its allies for them.
Husseini is former executive vice president of exploration and production operations at Saudi Arabia's state-owned oil company Aramco. Saudi Arabia is OPEC's top oil producer and the world's biggest crude exporter.
There are already signs that OPEC will over deliver in January, the month its production deal begins.
Saudi Oil Minister Khalid al-Falih said last month that Saudi Arabia will pump about 10.2 million bpd in January, down from nearly 11.1 million bpd in November, according to the kingdom's figures.