Saudi cut output in Sept, sees balanced market

Saudi Arabia cut oil production to 9.3 million barrels per day (bpd) in September from 9.8 million bpd in August and remains ready to meet all its customers' needs, Saudi Oil Minister Ali al-Naimi said on Saturday.

Leading oil exporter Saudi Arabia raised production by around 900,000 bpd to about 9.8m in June after failing to win support for an official OPEC output increase in Vienna.

Saudi output has fluctuated since. It dipped to 9.60 million bpd in July, according to official data.

But production rose to 9.8m bpd in August before dropping by about half a million barrels per day last month, Naimi said.

"Demand is always fluctuating but our position is that we will supply whatever our customers ask for," Naimi told reporters in Dhahran, adding that the global oil market is balanced.

"We will always continue to meet the demands of our customers," he added.

He did not say why Saudi production fell from August to September.

Saudi Arabia and its price-dove Gulf Opec allies raised production over the summer after failing to convince price hawks in the group to agree to raise output to make up for a lack of Libyan oil.

But the Organisation of the Petroleum Exporting Countries has since cut its oil demand forecast on a gloomy economic outlook, which combined with the prospect of some Libyan oil returning to market weighed heavily on prices last month.

Despite a rally at the end of last week, benchmark Brent crude prices have fallen around $22 from April's $127-a-barrel peak to under $106 on Friday,

Saudi Arabia's own oil demand for power generation rises with increased air conditioning demand in the hot summer months, with some analysts estimating over a million barrels a day may have been used on some days in August.

Part of the drop in production from August to September may be due to less Saudi demand for its own oil.

The International Energy Agency estimates Saudi power sector crude demand averaged 676,000 bpd from April-September 2010, falling to 398,000 bpd in the cooler six months of last year.