Qatar deepens March oil supply cuts

Small OPEC producer Qatar has told Asian customers it will cut supplies of its main crude oil grade even further in March, while increasing shipments of its smaller stream, trade sources said on Friday.

Qatar, which pumps less than any OPEC member except for Ecuador, has notified at least six Asian term buyers it will cut supplies of medium-heavy Qatar Marine crude by 15 percent from contracted volumes in March.

This more than doubles the 6 percent cut it assigned in February, the traders said.

Qatar’s notice came after top producer Saudi Arabia said it would pump in February below its OPEC target of 8.05 million barrels per day (bpd), undershooting what was already a record supply cut agreed in December.

OPEC oil ministers agreed last month to add a 2.2 million bpd curb on top of earlier agreed reductions of 2.0 million bpd, in a race to balance supply with rapidly crumbling demand for fuel.

However, Abu Dhabi said on Thursday it would slightly increase supplies of its flagship Murban crude to Asia in March from February levels, but kept curbs on supplies on three other main grades unchanged.

“I think they (OPEC members) are pretty much done cutting for now. I don’t expect them to cut extra. Any cut you hear from them, they’re just implementing what they promised,” said Clarence Chu, a trader at US-based Hudson Capital Energy in Singapore.

“I think most likely they won’t cut further in the March meeting, unless oil trends lower before the meeting. The market seems to have found a bottom.”

Oil prices, which have been trading in the $32-$50 range this month, stood at $41.57 a barrel by 0501 GMT.

Qatar’s implied target output would be of 730,000 bpd from January 1, down 120,000 bpd from its September production.

Two buyers who received notices from Qatar said there would be no cuts of Qatar Land crude allocations from the contracted volumes in March, after cutting Land supplies by 3 percent in February. Three others said they have not been notified of any Qatar Land supply levels.

“Some term lifters may have terminated Qatar Land contract or reduced their contractual volume at the end of 2008 and Qatar Petroleum may have unsold barrels,” said a source with a term lifter.

Qatar also notified Asian lifters that it would leave its 5 percent operational tolerance for March volumes, unchanged from February.

Qatar has been cutting crude supplies to Asia since this month, in line with OPEC’s agreement to cut production to prop up prices that have collapsed more than $100 a barrel since July. Saudi Arabia’s allocation cuts have yet to be released.

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