OPEC to hold production ceiling steady for now, eyes cut in early 2004
Friday, December 5 2003 - 06:00 AM WIB
"The conference decided to maintain the levels of production as it is and we are going to meet again on February 10 in Algiers and then we will have to decide the forecast for the second quarter," OPEC Secretary General Alvaro Silva-Calderon told reporters at the close of the meeting.
OPEC said in a statement the crude oil market was currently "well supplied" and therefore "decided to maintain the currently agreed production level until further notice" and called on its members "to ensure strict compliance" with their quotas.
The 11-member organisation said a "significant supply over-hang (is) expected to exert considerable pressure on oil prices" in the second quarter of 2004 and said it was "determined to take any measures ... to maintain the stability of the oil market."
Calderon estimated at excess supply would reach 2.4 millions barrels per day in the second quarter, due to lower seasonal demand as winter in the northern hemisphere draws to an end, and because non-OPEC producing countries are expected to hike production.
"We have to deal with the situation," said Calderon.
Kuwaiti Oil Minister Ahmad Fahad Al-Sabah said he believed a cut will be needed for the second quarter.
OPEC kingpin Saudi Arabian has argued strongly for the need for a reduction to be implemented in March.
"There is some concern for next year in the second quarter, some pro-active action needs to be taken," said its oil minister, Ali Al-Nuaimi.
OPEC, which controls about one third of world's crude oil supply, said it would keep a close eye on oil prices, which since June have stayed near and often hovered above the upper limit of the 22-28 dollar per barrel price band the organisation targets.
The statement said that high prices were the reflection of prevailing "geopolitical concerns."
It also said that the dollar's recent weakness against other major currencies was biting into producers' purchasing power.
OPEC members depend heavily on dollar-priced oil exports for their budgets and development plans.
The cartel's outgoing rotating president, Abdullah Bin Hamad Al-Attiyah, said OPEC states have suffered a 35 percent decline in purchasing power in terms of euros since last year.
Besides the February meeting, OPEC announced that it would hold a second extraordinary meeting in Beirut on June 3, 2004 and set the date for its next ordinary session in Vienna at March 31.
Venezuela's Energy Minister Rafael Ramirez said the meetings are aimed at monitoring the market and said non-OPEC oil producers would be invited as observers.
He said the candidacy of fellow Venezuelan Calderon, who is seeking a second term for the position of secretary general, still stood and would be examined again at the February meeting.
The organisation failed Thursday to reach a consensus on the job and Attiyah said he hoped they would reach consensus in Algiers in February.
The other candidates are Iranian oil official Hadi Nejad Hosseinian and Adnan Shihab-Eldin, a Kuwaiti who heads OPEC's research division.
Indonesia, which will in January take over the rotating presidency of the cartel, will appoint one of its officials to fill the post in the interim, said Algerian Energy Minister Chakib Khelil.
Before the meeting Venezuela said it would moot a reduction and oil prices nudged higher in anticipation.
Prices see-sawed Thursday afternoon after OPEC opted to maintain the current production ceiling, which has been in place since November 1 when a 3.5 percent cut took effect.
The price of Brent North Sea crude oil for January delivery dropped sharply in London after the announcement, but later recovered to stand down one cent at 29.13 dollars per barrel in late trading.
New York's reference light sweet crude January contract rose 18 cents to 31.28 dollars per barrel in early deals.(*)