UPDATE 2-OPEC cuts Jan oil output sharply-Petrologistics

Fri Jan 23, 2009 12:25pm GMT

* OPEC-11 expected to cut output by 1.55 mln bpd in Jan

* Saudi Arabia, Venezuela and Nigeria lead cutbacks

* OPEC still pumping more than their collective target

(Adds details, quote)

By Alex Lawler

LONDON, Jan 23 (Reuters) - OPEC oil supply, excluding Iraq, is expected to fall by 1.55 million barrels per day (bpd) in January as members implement their latest deal to cut output, consultant Petrologistics said on Friday.

The estimate indicates the Organization of the Petroleum Exporting Countries is delivering on the bulk of its pledge to cut output by 2.2 million bpd from Jan. 1 to counter contracting world demand and collapsing prices.

OPEC's 11 members bound by oil output targets, all except Iraq, are expected to pump 26.1 million bpd in January, down from a revised 27.65 million bpd in December, Conrad Gerber of Petrologistics told Reuters.

"Overall, it's pretty good compliance and quite encouraging," he said.

December's supply was revised higher from a Dec. 30 estimate of 27.1 million bpd. Despite the cut in output this month, OPEC is still pumping more than its target of 24.84 million bpd that took effect on Jan. 1.

Saudi Arabia, OPEC's top producer, cut supply to 8.05 million bpd, down 550,000 bpd from December, Gerber said. Nigeria lowered output to 1.76 million bpd, a drop of 270,000 bpd from last month.

Oil prices pared losses after the Petrologistics estimate was issued. U.S. crude CLc1 was down 93 cents at $42.74 as of 1146 GMT. Prices are down more than $100 from a record high reached in the summer.

VENEZUELA COMPLIES

Petrologistics said there was evidence of a large reduction in supply from Venezuela, a country which some OPEC delegates have identified as a source of concern about compliance with OPEC agreements.

Venezuela curbed output to 1.97 million bpd, down 230,000 bpd, Petrologistics said, below its implied OPEC target of 1.99 million bpd. Caracas has said it would cut supply to some U.S. oil refineries to meet its commitments.

OPEC has agreed at meetings since September to cut its oil output by 4.2 million bpd, equal to 5 percent of daily world demand as the economic crisis erodes fuel consumption and weakens crude prices.

The latest reduction of 2.2 million bpd, OPEC's largest ever single supply cut, took effect on Jan. 1.

Iraq is expected to pump 2.45 million bpd in January, up 20,000 bpd from December, bringing total OPEC supply to 28.55 million bpd this month.

Petrologistics measures OPEC supply, which excludes oil produced and placed in storage, by tracking oil tanker shipments. OPEC does not issue timely estimates of its own production.

The total for both January and December excludes Indonesia, which left OPEC at the end of 2008. (Reporting by Alex Lawler; Editing by William Hardy)