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OPEC set to hold production
KUWAIT CITY - The OPEC oil cartel is expected to leave its production quota unchanged at a meeting here on Monday, with the market well supplied and prices steady, but members may consider a cut in the new year.In a sign of what to expect, an influential advisory group said late Sunday that the Organisation of the Petroleum Exporting Countries should maintain production for now and meet again by early February. Several members of the 11-nation group want an extra meeting to address concern at an expected drop in demand for oil in the second quarter of 2006 because of warmer weather in the industrialised northern hemisphere. Analysts predict OPEC will have to lower its quota of 28 million barrels per day (bpd) before March to counter waning demand and a knock-on drop in prices. For now, however, OPEC quotas look set to remain unchanged, with actual production remaining at high levels of about 30 million bpd when Iraqâs output is included. The war-torn country is usually excluded from the quota system. âThe two main points that are acceptable are a meeting in January or early February, and to maintain our production level,â said Kuwaiti energy minister Sheikh Ahmad Fahd Al Sabah, who also holds the rotating OPEC presidency. âIt looks like the idea has been accepted by everyone,â he told reporters after the late Sunday night meeting of the so-called ministerial monitoring sub-committee, which also comprises the oil ministers of Iran and Nigeria. OPEC often, but not always, follows the advice of the trio. But a question mark still hangs over whether to renew a three-month pledge to make an extra two million barrels per day available to the oil market. The emergency spare capacity, which expires on December 31, was created in September to meet demand -- if necessary -- in the wake of hurricane disruption to US output, but so far there have been no takers. Sheikh Ahmad indicated that the measure was slightly redundant because the drama of hurricanes Katrina and Rita had passed. In addition, the price of oil, which hit a record high of 70.85 dollars per barrel on August 30 in New York, had fallen back to a more acceptable level. âNow I donât think thereâs a reason (for the extra capacity) because thereâs no need in the market,â said the Kuwaiti energy minister. As for the sensitive issue of oil prices, members appear satisfied with the current level, which is hovering around the 60 dollars a barrel mark in New York, ensuring ample revenue fills their coffers. The price of oil has tripled since the start of 2002. Libyaâs Energy Secretary Fathi Hamed bin Shatwan Shatwan said on Sunday he thought the very minimum price for oil should be 40 dollars. âIt is the red line for us,â he said, adding that a price of 60 dollars made both consumers and producers happy.
Posted by: Steve White 2005-12-12 |
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