OPEC Ministers Agree To Keep Output Steady
Thursday, March 15th 2007, 8:05 am
By: News On 6
VIENNA, Austria (AP) _ OPEC oil ministers agree that their organization should maintain crude production levels, a senior Libyan oil official said Thursday, signaling that they will opt for the status quo in their formal decision later in the day.
The comments by Shokri Ghanem, the head of Libyan oil policy and chief executive of Libya's National Oil Co., echoed others by oil ministers of the Organization of Petroleum Exporting Countries, leaving little doubt of the meeting's outcome.
``All ministers are in agreement,'' on keeping current agreed on output levels, Ghanem told reporters after a breakfast meeting of the Organization of Petroleum Exporting Countries and just before the start of the meeting that was reviewing the effectiveness of recent output cuts.
The 10 OPEC members bound by quotas agreed to total cuts of 1.7 million barrels a day in October and February. And while analysts say that the reductions have not been fully implemented, they have kept prices at levels OPEC feels comfortable with.
Among those reportedly backing keeping output steady _ though possibly without present production above agreed quotas _ is Saudi Arabia's oil minister, Ali Naimi, whose country is OPEC's No. 1 producer.
In comments carried by the Saudi-owned Al Hayat newspaper, Naimi said the ``markets are comfortable, stocks are comfortable, so there is no need to change production,'' adding that two cutbacks in the past four months were ``good and appropriate'' decisions.
Further indicating that the oil ministers will opt to keep output at levels agreed on at their last meeting, an OPEC advisory panel recommended the organization focus on greater compliance with maintaining present quotas.
OPEC officials said the committee estimates current compliance with the two rounds of cuts agreed on in October and December is at about 70 percent.
In its monthly oil report on Tuesday, the International Energy Agency said that _ without Iraq and Angola, which are not bound by quotas _ daily OPEC oil production last month was at 26.8 million barrels a day. Total OPEC output last month averaged 30.2 million barrels _ 400,000 barrels less than OPEC should produce to meet world demand, said the IEA, the energy watchdog of the world's major industrialized countries.
OPEC, in its own monthly report issued Thursday, raised estimated output requirements, saying the organization needed to produce 180,000 more barrels a day between April and June than it forecast last month.
For the year, said the report, OPEC will need to boost output by a daily 150,000 barrels to 30.4. million barrels a day. It put global oil demand at 85.5 million barrels a day _ up by about 100,000 barrels a day over its previous forecast.
Two cuts in the past four months have contributed to relative stability that has kept benchmark crude between US$50 and US$60 a barrel _ down from the record highs of above US$78 a barrel last summer, but still around 40 percent above 2004 levels.
On Thursday, oil prices gained after figures showing that supplies of U.S. gasoline and other refined products fell in the most recent week. The market also got a lift from Wall Street's recovery from its plunge Tuesday that stirred concerns about the U.S. economy's health and future demand for energy. Major markets elsewhere were also in positive territory on Thursday.
Light, sweet crude for April delivery rose 37 cents to US$58.53 a barrel in electronic trading on the New York Mercantile Exchange. April Brent crude on the ICE Futures exchange gained 24 cents to US$61.30 a barrel.
Present prices leave comfortable profit margins both for producers and the major oil companies while remaining below the pain threshold that leads to less world consumption _ and increased interest in alternative fuels such as ethanol and wind and nuclear energy.
But with the traditionally high-demand North American summer driving season approaching, there is little likelihood of a near-term prolonged slide in prices _ and of resulting production cutbacks any time soon. Instead, OPEC might be looking at pressure to increase production at its next meeting, possibly in June.
``We seek prices that are stable, sustainable and acceptable to producers and consumers alike,'' Mohammed al-Hamli, the United Arab Emirates' oil minister and OPEC president told the meeting in his opening address.
But despite apparent general OPEC satisfaction with present price levels, al-Hamli expressed concern about the weak U.S. dollar, nothing that was ``having a significant effect on the purchasing power of oil-producing developing countries in many parts of the world.''