Opec decides against raising production
Thursday, 6 December 2007
Javier Blas, FT Syndication Service
ABU DHABI: Opec on Wednesday decided to keep its official production level unchanged and meet again on February 1 to review output requirements, ministers from the cartel's member countries said.
The Organisation of the Petroleum Exporting Countries has been under pressure from consuming countries, led by the US, to pump more oil.
While Saudi Arabia and other moderates, such as Kuwait, had been working behind the scenes in Abu Dhabi to placate consumers' fears, the price hawks, led by Algeria and Venezuela, opposed any output increase and said a price of $100 a barrel was fair.
West Texas Intermediate crude oil jumped by a dollar to $89.32 following the decision, about 10 per cent below its recent nominal all-time high of $99.29 a barrel.
The price has fallen sharply in the last week on hopes the cartel would increase production ahead of the key consuming period for the northern hemisphere countries.
The price hawks appeared on Wednesday to be gaining the upper hand, with delegates to the meeting in Abu Dhabi saying the cartel was most likely to maintain its official production ceiling, also known as its quota, at current levels and meet again in early 2008.
Opec is expected to make a formal announcement at 1100 GMT.
Samuel Bodman, the US secretary of energy, on Tuesday reiterated his call for Opec to increase its output to replenish the world's low crude oil inventories before the winter.
Opec officials emphasised that whatever the group's final decision over the official limit, it was already producing more oil and the trend would continue in the near term. However, a decision to keep its official limit unchanged risks reigniting bullish sentiment in the oil market that could push prices back towards $100 a barrel.
The 10 members of Opec subject to quotas - Iraq, Angola and Ecuador are excluded - in November pumped about 27.1m barrels a day. That figure is expected to rise to at least 27.3m b/d in December as the largest United Arab Emirates' oilfield comes back on line following a period of maintenance, according to Opec delegates.
Angola and Iraq are also expected to increase production by at least 200,000 b/d, meaning that the group's production at the beginning of 2008 would be at least 400,000 b/d higher than it was in early November.
"A bit of cheating does not hurt anyone," a senior official said. Another delegate added: "The important figure is not the official quota but the real volume already being supplied to the market or that is on its way."
Freight rates for large crude oil tankers between the Gulf and Asia jumped this week to the highest level in 22 months, suggesting that oil companies are booking more tankers to ship oil. Mike Rothman, the head of oil research at ISI Group, said: "It seems to me that more barrels are coming."
Delegates said ahead of Wednesday's meeting that the cartel was considering two options: either increasing its official production limit by at least 500,000 b/d to placate consumer nations or leaving it unchanged.
Ali Naimi, the Saudi oil minister and de facto Opec leader, kept his cards close to his chest, saying: "All the options are open."
ABU DHABI: Opec on Wednesday decided to keep its official production level unchanged and meet again on February 1 to review output requirements, ministers from the cartel's member countries said.
The Organisation of the Petroleum Exporting Countries has been under pressure from consuming countries, led by the US, to pump more oil.
While Saudi Arabia and other moderates, such as Kuwait, had been working behind the scenes in Abu Dhabi to placate consumers' fears, the price hawks, led by Algeria and Venezuela, opposed any output increase and said a price of $100 a barrel was fair.
West Texas Intermediate crude oil jumped by a dollar to $89.32 following the decision, about 10 per cent below its recent nominal all-time high of $99.29 a barrel.
The price has fallen sharply in the last week on hopes the cartel would increase production ahead of the key consuming period for the northern hemisphere countries.
The price hawks appeared on Wednesday to be gaining the upper hand, with delegates to the meeting in Abu Dhabi saying the cartel was most likely to maintain its official production ceiling, also known as its quota, at current levels and meet again in early 2008.
Opec is expected to make a formal announcement at 1100 GMT.
Samuel Bodman, the US secretary of energy, on Tuesday reiterated his call for Opec to increase its output to replenish the world's low crude oil inventories before the winter.
Opec officials emphasised that whatever the group's final decision over the official limit, it was already producing more oil and the trend would continue in the near term. However, a decision to keep its official limit unchanged risks reigniting bullish sentiment in the oil market that could push prices back towards $100 a barrel.
The 10 members of Opec subject to quotas - Iraq, Angola and Ecuador are excluded - in November pumped about 27.1m barrels a day. That figure is expected to rise to at least 27.3m b/d in December as the largest United Arab Emirates' oilfield comes back on line following a period of maintenance, according to Opec delegates.
Angola and Iraq are also expected to increase production by at least 200,000 b/d, meaning that the group's production at the beginning of 2008 would be at least 400,000 b/d higher than it was in early November.
"A bit of cheating does not hurt anyone," a senior official said. Another delegate added: "The important figure is not the official quota but the real volume already being supplied to the market or that is on its way."
Freight rates for large crude oil tankers between the Gulf and Asia jumped this week to the highest level in 22 months, suggesting that oil companies are booking more tankers to ship oil. Mike Rothman, the head of oil research at ISI Group, said: "It seems to me that more barrels are coming."
Delegates said ahead of Wednesday's meeting that the cartel was considering two options: either increasing its official production limit by at least 500,000 b/d to placate consumer nations or leaving it unchanged.
Ali Naimi, the Saudi oil minister and de facto Opec leader, kept his cards close to his chest, saying: "All the options are open."