A wary OPEC unlikely to change production

VIENNA – OPEC will likely hold its oil production steady for now – but it’s casting a wary eye on prices as the cost of crude plummets to five-month lows.

The Organisation of Petroleum Exporting Countries, meeting in Vienna yesterday, was expected to maintain its output quota of 28 million barrels a day. With supplies outstripping demand but markets still jittery, key members of the 11-nation cartel said they see no reason to tighten or loosen their taps, and OPEC’s own advisory panel urged the group to keep production at current levels.But tumbling prices have grabbed OPEC’s attention, and Iran’s oil minister hinted that a cut in output targets could come before winter in the Northern Hemisphere.Kazem Vaziri Hamaneh told reporters yesterday that cartel members worried about falling prices would debate the option of a cut in output by the end of the year.”We’re going to discuss it,” he said.Crude dipped below US$66 a barrel in electronic trading yesterday amid expectations that OPEC would leave its production targets untouched.Prices have plunged by more than US$10 since light sweet crude hit a record US$78,40 in mid-July, just after fighting erupted in Lebanon.Oil prices dipped again yesterday, with light, sweet crude for October delivery down 50 cents to US$65,75 a barrel in electronic trading on the New York Mercantile Exchange.Each US$10 drop in price, analysts say, translates into a 25-cent drop at the gas pump.”This is the time to talk about” an eventual cut, OPEC President Edmund Daukoru, Nigeria’s oil minister, said yesterday.”Definitely we will not be producing more – that’s for sure.”Venezuelan oil minister Rafael Ramirez also said the group needed to consider scaling back production at some point, noting that crude inventories “are above normal levels”.OPEC, which meets about 40 per cent of the world’s demand for crude, wants to see whether prices are in a free fall or are merely reacting to high inventories, the cessation of hostilities in Lebanon and progress in talks between Iran and Western powers trying to contain its suspect nuclear programme.Excluding Iraq, which is not part of OPEC’s quota system, the group is now pumping about 27,5 million barrels a day – half a million barrels under its target – said Ali Naimi, oil minister of Saudi Arabia, the world’s No 1 oil exporter.Naimi said yesterday he was “very optimistic” about global oil demand next year, playing down concerns that world economic growth may be slowing and characterising recent price drops as insignificant “blips”.Unofficially, there was talk of drawing up an action plan if prices dip below US$60 a barrel – a level that could prompt the cartel, now pumping at close to capacity, to start tightening its taps.Supplies remain ample despite concerns over Iran, losses from BP PLC’s leak-prone Alaskan oil pipelines, chronic outages in Iraq and attacks on oil infrastructure by militants in Nigeria – Africa’s biggest producer.US inventories are at their highest levels since 1998, the Department of Energy reported last week.Analysts said prices could face further pressure in 2007 if production from non-OPEC nations such as Angola, Brazil and Caspian Sea countries like Azerbaijan rises significantly as expected.Nampa-APWith supplies outstripping demand but markets still jittery, key members of the 11-nation cartel said they see no reason to tighten or loosen their taps, and OPEC’s own advisory panel urged the group to keep production at current levels.But tumbling prices have grabbed OPEC’s attention, and Iran’s oil minister hinted that a cut in output targets could come before winter in the Northern Hemisphere.Kazem Vaziri Hamaneh told reporters yesterday that cartel members worried about falling prices would debate the option of a cut in output by the end of the year.”We’re going to discuss it,” he said.Crude dipped below US$66 a barrel in electronic trading yesterday amid expectations that OPEC would leave its production targets untouched.Prices have plunged by more than US$10 since light sweet crude hit a record US$78,40 in mid-July, just after fighting erupted in Lebanon.Oil prices dipped again yesterday, with light, sweet crude for October delivery down 50 cents to US$65,75 a barrel in electronic trading on the New York Mercantile Exchange.Each US$10 drop in price, analysts say, translates into a 25-cent drop at the gas pump.”This is the time to talk about” an eventual cut, OPEC President Edmund Daukoru, Nigeria’s oil minister, said yesterday.”Definitely we will not be producing more – that’s for sure.”Venezuelan oil minister Rafael Ramirez also said the group needed to consider scaling back production at some point, noting that crude inventories “are above normal levels”.OPEC, which meets about 40 per cent of the world’s demand for crude, wants to see whether prices are in a free fall or are merely reacting to high inventories, the cessation of hostilities in Lebanon and progress in talks between Iran and Western powers trying to contain its suspect nuclear programme.Excluding Iraq, which is not part of OPEC’s quota system, the group is now pumping about 27,5 million barrels a day – half a million barrels under its target – said Ali Naimi, oil minister of Saudi Arabia, the world’s No 1 oil exporter.Naimi said yesterday he was “very optimistic” about global oil demand next year, playing down concerns that world economic growth may be slowing and characterising recent price drops as insignificant “blips”.Unofficially, there was talk of drawing up an action plan if prices dip below US$60 a barrel – a level that could prompt the cartel, now pumping at close to capacity, to start tightening its taps.Supplies remain ample despite concerns over Iran, losses from BP PLC’s leak-prone Alaskan oil pipelines, chronic outages in Iraq and attacks on oil infrastructure by militants in Nigeria – Africa’s biggest producer.US inventories are at their highest levels since 1998, the Department of Energy reported last week.Analysts said prices could face further pressure in 2007 if production from non-OPEC nations such as Angola, Brazil and Caspian Sea countries like Azerbaijan rises significantly as expected.Nampa-AP