OPEC seen likely to keep output ceiling unchanged: Report
Tuesday, December 2 2003 - 02:47 PM WIB
Kuwaiti oil minister Sheikh Ahmed Fahed al-Sabah said Dec 1 that he expected OPEC to maintain the current ceiling. "I think Kuwait will not ask to increase production in this meeting and will not ask to reduce it either," he said. "We will continue our ceiling now."
The UAE and Iran said Nov 30 they saw no need to adjust output. UAE oil minister Obaid al-Nasseri said there was no need for OPEC to change quotas because the market was "almost stable" and well supplied with crude. Official news agency WAM quoted Nasseri telling reporters that current conditions on the international market "do not require any action by OPEC oil ministers to revise production levels when they meet on Thursday in Vienna."
Iranian oil minister Bijan Zanganeh said there was no shortage of oil on world markets and that current high prices were due to political uncertainty surrounding Iraq. Official news agency IRNA quoted Zanganeh saying that market data showed there was "currently no shortage of oil," and that "the prevailing high prices are due to the unstable political situation in Iraq." The Iranian minister was also quoted saying there was no need to cut production either.
The only minister to sing from a different song sheet so far appears to be Algerian oil minister Chakib Khelil, who warned in remarks published Dec 1 that oil prices would fall early next year without pre-emptive action by OPEC this week. Asked by Spanish business newspaper Cinco Dias whether he believed OPEC should reduce crude output at Thursday's ministerial conference, Khelil said: "In the second quarter of next year there will be a fall of 2 million barrels per day in petroleum demand. If the organization does not change its position in December, the prices are going to fall."
Kuwait's Sheikh Ahmed conceded that prices were likely to fall early next year, but within OPEC's target band. "We expect prices to go down by the first quarter of next year and the prices will be within the acceptable level during the first quarter," he said. "Accordingly, Kuwait will ask to maintain the current production level," he said. Asked if OPEC might meet again before its next scheduled gathering next March, Sheikh Ahmed said the group would monitor prices and would meet if prices moved below or above the target band. "Our target is to achieve the OPEC strategy..that is a price not exceeding $22- $28 per barrel."
OPEC powerhouse Saudi Arabia has yet to outline its position, however.
The group meets this week against a background of high prices but amid expectations that demand will plunge in the second quarter of next year.
OPEC's basket, which stood at $28.45 per barrel Friday, has been moving around the top end of the band for some time, raising the possibility of an output increase. For the year to Nov 27 it averaged $27.95 per barrel.
The pressure on OPEC to release additional crude lifted at least temporarily last week when the basket dipped back within the $22-28 per barrel target band for one day last week after 12 consecutive trading days above $28 per barrel. The basket has moved back up above the bandm but even if it remains above $28 per barrel for a further 19 consecutive days, it will be Dec 23 before OPEC ministers will have to respond to any triggering of the so-called price band mechanism.
Had the basket not moved back down inside the band on Nov 25 but remained above it for the full 20 consecutive days, the mechanism would have been triggered this week during the OPEC meeting.
However, OPEC's Vienna secretariat believes that demand for OPEC crude and stocks will plunge by more than 2 million barrels per day in the second quarter to 24.48 million barrels per day, and some analysts believe OPEC should cut output now in order to avert a sharp price fall. A senior OPEC delegate last week challenged the secretariat's forecast, saying that it was overly conservative and that demand would be "much higher," even in the event of a mild winter. (*)