Tags: AF | OPEC | Meeting

OPEC Chief: Oil Output May Hold Steady

Monday, 21 Dec 2009 08:18 AM

OPEC's secretary general said Monday there is consensus within the oil-producing bloc to maintain its production targets into 2010, indicating the group plans to hold output steady when it meets in the Angolan capital.

Analysts say Tuesday's talks in Angola will instead center on members' inability to stick to production limits.

Secretary General Abdalla Salem El-Badri of Libya said prices are "very comfortable" for now, reflecting a sentiment sounded by several of the group's oil ministers in recent weeks.

Crude prices have staged an incredible turnaround in the past year, more than doubling from a low near $35 a barrel to trade to a zone many producing countries say they're happy with.

"There is a consensus that there is no change," el-Badri told reporters when asked about OPEC's output plans at the upcoming meeting in Luanda. Even for next year, he said, changes to output are "not on our radar at this time."

Saudi Arabia, the world's top crude exporter and OPEC's de facto leader, considers at least $75 a fair price for a barrel of oil. That's not far from where prices stand now.

Benchmark crude prices were hovering above $73 a barrel at midday in Luanda.

"I don't think anyone in the group was really expecting prices to rebound as fast as they did," said independent analyst and trader Stephen Schork. "They're counting their blessings with the price they have, and that it's been sustained."

The bloc last week nudged its 2010 forecast for global oil demand slightly higher, but warned that the market still faces risks because of lingering questions about the world's ability to rebound from its worst recession in decades.

OPEC called 2009 one of the worst years for global oil demand, and expects appetite to remain weak through the first half of 2010.

Anemic demand has prevented prices from heading back toward $100 a barrel. That has kept OPEC from drawing blame for stifling early signs of an economic turnaround.

"When the price of oil gets to $80, OPEC obviously recognizes it would inhibit recovery," said John Hall, chairman of EnergyQuote's John Hall Associates consultancy in London. "They are concerned. They want to see recovery move ahead."

Chakib Khelil, Algeria's energy minister, was among the most recent OPEC minister to indicate he doesn't expect any new production targets. "There will be no change in OPEC's supply," he told reporters before leaving for Angola on Sunday, according to Kuwait's state news agency KUNA.

The last time the Organization of the Petroleum Exporting Countries adjusted its output targets was December 2008, when the 12-nation bloc capped a rapid-fire series of cuts that slashed a whopping 4.2 million barrels off the world's daily oil supply. Those cutbacks were meant to halt a slide from an all-time record near $150 a barrel to the low-$30s in just five months.

With new targets likely off the table, analysts say talks in Angola will instead center on members' inability to maintain cohesion.

"There is going to be one topic of discussion in Angola. It's going to be all about compliance," said James Cordier, president of Tampa, Florida-based trading firm Liberty Trading Group. "Compliance is pathetic right now."

Many member countries take advantage of rising prices to pump more than their allotted share, but OPEC hard-liners like Saudi Arabia and some of its Gulf Arab neighbors frown on that oversupply because it undermines the group's efforts to maintain a price floor. Analysts say compliance levels for the group have dropped to a new low of about 60 percent.

One option OPEC has is to retool its official output targets to better reflect its own cheating members' actual production levels, EnergyQuote's Hall said.

For Angola, OPEC's newest member, Tuesday's gathering is a chance to spotlight its emergence as a major player in the oil industry after decades of civil war.

A boom in its petroleum sector has kick-started development efforts like new high-rise building projects in the capital Luanda, though many in the Portuguese-speaking country still are impoverished.

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OPEC's secretary general said Monday there is consensus within the oil-producing bloc to maintain its production targets into 2010, indicating the group plans to hold output steady when it meets in the Angolan capital.Analysts say Tuesday's talks in Angola will instead...
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2009-18-21
Monday, 21 Dec 2009 08:18 AM
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