OPEC signals that $50-a-barrel oil prices are not excessive
VIENNA, Austria - Most OPEC members say there's no need to modify the organization's oil output and signal that prices hovering near the $50-a-barrel level aren't excessive - a sentiment that could result in winter heating oil prices remaining high.
"Almost all the members support the idea to keep the same ceiling of our production without any change," said Kuwait's oil minister Sheik Ahmad Fahd al-Ahmad al-Sabah, who heads the 11-member group, ahead of a gathering today in Vienna.
The Organization of Petroleum Exporting Countries, which accounts for a third of the world's oil supply, appeared set to put the issue off until the next meeting in Iran in March.
Qatari oil minister Abdullah bin Hamad al-Attiyah said OPEC would probably have a 1.5 million barrel surplus during the second quarter, which could signal a likely cut in March.
"I think we'll meet tomorrow [Sunday] and we'll discuss the market situation and we'll see what there is to do," he said. "Now, everybody is not concerned, but by the second quarter there will be a big concern."
Iranian Oil Minister Bijan Namdar Zangeneh said he didn't believe OPEC could change anything. Rather, he said OPEC should keep its focus on improving its compliance with existing output targets - production is about 29.6 million barrels a day, above the 27 million limit the group set during its December meeting.
The issue is crucial because OPEC is seeking to keep its buyers - and their consumers - from becoming jittery that prices could resume their climb. Prices hit a record $55.17 per barrel in late October.
Al-Sabah said the cartel was closely monitoring prices and weighing options, adding that it could decide to change crude oil output policy next month via a telephone conference - but only if market conditions warranted.
OPEC is trying to balance consumers' concerns about high prices with its worry that oil markets could become oversupplied in the spring, after the worst of the northern hemisphere winter. Commercial petroleum inventories are growing at a time when they normally drop, ministers say.
Yet the price of oil has not worried OPEC, Saudi Arabian Oil Minister Ali Naimi said. "The world economy has grown so big, a little fluctuation here and there won't hurt it," Naimi said. "You have to keep looking at the inventories, looking at the economy. If all the signs are positive, then it's OK."
It's a sentiment unlikely to ease consumer fears of higher prices.
Indonesia wants OPEC to keep output unchanged, the country's oil minister said yesterday. "We're not that comfortable with $50 oil. We prefer levels of around $35," Indonesian Oil Minister Purnomo Yusgiantoro said in Davos, Switzerland, where the World Economic Forum was meeting.
"We have a dilemma. We see a one to 1.5 million barrel-a-day drop in second-quarter demand, but on the other side we see prices getting stronger," Purnomo said.
At the World Economic Forum, Total SA's chairman and chief executive Thierry Demarest said it's the small buffer of spare production capacity that has oil markets so nervous, noting the impact of development in China and India and their increasing demand for oil.
It's up to "the international community to take action to moderate demand, through energy savings programs and encouraging substitutes for fossil fuels" to ease pressure on the long term, he said.
Edmund Dakouru, the oil adviser to Nigeria's president, said the price of oil is not really affecting the world economy.
"The position we are now in is very different to this time in 2004, when everyone was more concerned about the state of the U.S. economy," he said yesterday. "I believe that we should maintain things as they are for now. I feel that the cold winter could keep prices up."