The free market at work :01/11 05:41
Saudi to Cut Crude Oil Supplies to Asia, Buyers Say (Update1)
By Taizo Hirose
Tokyo, Jan. 11 (Bloomberg) -- Saudi Arabia, the world's largest oil producer, told Asian customers of a planned 12 percent cut in shipments next month, buyers said, the latest sign OPEC intends to cut production next month to prop up prices.
Importers in Japan and South Korea were notified of the change, said officials at SK Corp., South Korea's biggest oil refiner, and Japan Energy Corp., the nation's fourth-largest refiner by market value. Saudi Arabia's state-owned Saudi Aramco oil company declined to comment on the reports.
The planned cut foreshadows a meeting Wednesday of the Organization of Petroleum Exporting Countries, where members have signaled a lowering of quotas by at least 1.5 million barrels a day, or 5.4 percent of the group's production last month.
``The Saudis have initiated the move, and the market has taken the view that the rest will follow suit,'' said Tim Noest, an analyst with ADM Investor Services International in London.
The reports of Saudi Arabia cutting supply to Asian clients is consistent with it shaving 500,000 barrels a day off its output, according to Platt's Global Alert, a commodities news service. That would equate proportionally to a cut of 1.5 million barrels a day for OPEC producers as a whole.
Saudi Arabia sells most of its crude under long-term contracts and normally informs buyers how much they can expect each month by the middle of the previous month. Its crude supply allocations to buyers in Japan, Korea, Taiwan and other Asian countries are generally adjusted by a similar percentage each month.
Brent crude oil for February settlement rose as much as 46 cents, or 1.8 percent, to $25.80 a barrel on London's International Petroleum Exchange. Prices have gained 6 percent this month amid traders' expectations that OPEC will cut output when it meets in Vienna. Prices fell by a fourth in December
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