Oil prices fall to lowest in five months

Sellers on Friday took comfort from a Reuters survey that found OPEC producers had leaked more oil in March, easing compliance with supply limits in anticipation of the decision to relax curbs from April.

Adherence by OPEC members to self-imposed curbs slipped five points to 62 per cent as the 10 that participate in cuts added 190,000 barrels a day from February, according to the survey.

Lower output from Iraq, not party to the restrictions, pushed total OPEC volumes down 200,000 bpd from February to 26.78 million, estimated the survey of OPEC and industry officials, consultants and tanker trackers.

The OPEC 10 leaked 1.62 million bpd out of a 4.32 million target for cuts established last March. Oil prices fell heavily before and after OPEC’s end-March deal to raise supply and are now almost $10 down from the early March peak.

Iran opted out of the deal, although it said it would still raise output. Iraq, still under UN embargoes, was not part of the accord either. Some non-OPEC exporters such as Mexico and Norway also have decided to partly reverse year-long output curbs, which were implemented in 1999 after crude prices sank to single digits.

Signs are already emerging of the extra barrels filtering into the market, including fresh data this week showing rises in crude inventories in the United States.

And refiners do not appear in any hurry to pick up the cheaper oil. "Maybe… consumers will not pile in until it is clear that there is a strong sign that crude prices have hit bottom," said analyst Lawrence Eagles at GNI Research in a daily report.

"However, it can also be argued that with all this crude on offer, there is no need to stockpile," Eagles said. The US Energy Information Administration (EIA) said in a monthly short-term energy outlook on Thursday that US crude prices would decline from the current $26 to $23.50 by late December as OPEC increased supplies.