OPEC may reject calls for more supply with oil at $76
Wednesday, 12 September 2007
Maher Chmaytelli and Fred Pals
OPEC, the producer of 40 percent of the world's oil, may reject consumer calls to increase supplies and lower prices from $76 a barrel on concern energy demand will falter as U.S. economic growth slows.
Oil ministers for Algeria, Iran, Libya, Qatar and Venezuela said in the past week they support keeping the quota at 25.845 million barrels a day until December. OPEC President Mohamed al- Hamli, who is also the United Arab Emirates oil minister, said yesterday markets are ``adequately supplied.''
The Organisation of Petroleum Exporting Countries will meet Sept. 11 at its Vienna headquarters to determine production targets for the fourth quarter, when heating fuel sales peak.
Oil rose 40 cents, or 0.5 percent to close at $76.60 a barrel today on the New York Mercantile Exchange. Futures have risen 26 percent this year, as 10 of the group's 12 members curtailed exports to drain inventories.
``I fear that OPEC has set implicitly a new target price of about $70 a barrel,'' said Claude Mandil in an interview on Aug. 30, his last day as director of the International Energy Agency, which advises 26 of the world's biggest oil-consuming nations. ``I deplore this because it weighs on the global economy and it's a burden for the poorest people.''
The Organization for Economic Cooperation and Development lowered its forecasts for economic growth this year in the U.S. and Europe on Sept. 5. The group cut its forecast for the U.S. to 1.9 percent from a May figure of 2.1 percent and for the 13 nations sharing the euro to 2.6 percent from 2.7 percent.
OPEC may make $530 billion next year from oil exports, up from $508 billion this year and $506 billion in 2006, according to Leo Drollas, the deputy director of the Centre for Global Energy Studies in London.
OPEC forecasts world oil demand will expand by 1.34 million barrels a day next year, or 1.6 percent, to 87.06 million barrels a day.
``I assure you that if there's any shortage we will supply more crude to the market, but I think the market is really stable at this time,'' OPEC Secretary-General Abdalla El-Badri said in an Aug. 28 interview in Luanda, Angola.
Members are pumping more than their agreement allows. The 10 members with quotas produced 26.71 million barrels a day last month, or about 860,000 barrels a day more than targeted, according to Bloomberg estimates. The planned cutback, agreed to in two meetings late last year, was 1.7 million barrels a day.
``OPEC is already dealing with its dilemma by gradually leaking more oil onto the market,'' said Adam Sieminski, Deutsche Bank's chief energy economist in New York.
Iraq is allowed to export as much as possible to rebuild its oil industry after two wars. OPEC's newest participant, Angola, hasn't been assigned a limit. Crude output from all 12 OPEC members was 30.33 million barrels a day last month.
El-Badri said the 10 members with quotas have completed about 60 percent of their promised cutback and that any level above 65 percent would be ``fine.'' The organization hasn't set an official price target since abandoning a $22- to $28-a-barrel range in 2003, following the U.S.-led invasion of Iraq.
Ramon Espinasa, the former chief economist at state-run Petroleos de Venezuela SA, said OPEC members are content with prices and will seek a ``low profile'' meeting next week. He's now an economist at the Inter-American Development Bank in Washington.
Indonesia, the only OPEC member recommending an increase in supplies, pays government subsidies on domestic fuel sales and imports crude to meet demand. Saudi Arabia, OPEC's largest producer, hasn't stated its position yet.
An increase in U.S. mortgage defaults by sub-prime borrowers would become a concern for oil producers if it causes ``a recession,'' Qatari Oil Minister Abdullah bin Hamad al-Attiyah said.
Libya's top oil official, Shokri Ghanem, said in a Sept. 4 interview that OPEC's record revenue is offsetting the weakness of the U.S. dollar, higher development costs and losses from the late 1990s, when demand sagged because of the financial crisis in Asia.
``OPEC keeps saying that there is sufficient supply,'' said Ingrid Angermann, an economist at Dresdner Bank AG said in an interview in Frankfurt today. ``At $76 a barrel, I don't see any sign of sufficient supply.''
Bloomberg
OPEC, the producer of 40 percent of the world's oil, may reject consumer calls to increase supplies and lower prices from $76 a barrel on concern energy demand will falter as U.S. economic growth slows.
Oil ministers for Algeria, Iran, Libya, Qatar and Venezuela said in the past week they support keeping the quota at 25.845 million barrels a day until December. OPEC President Mohamed al- Hamli, who is also the United Arab Emirates oil minister, said yesterday markets are ``adequately supplied.''
The Organisation of Petroleum Exporting Countries will meet Sept. 11 at its Vienna headquarters to determine production targets for the fourth quarter, when heating fuel sales peak.
Oil rose 40 cents, or 0.5 percent to close at $76.60 a barrel today on the New York Mercantile Exchange. Futures have risen 26 percent this year, as 10 of the group's 12 members curtailed exports to drain inventories.
``I fear that OPEC has set implicitly a new target price of about $70 a barrel,'' said Claude Mandil in an interview on Aug. 30, his last day as director of the International Energy Agency, which advises 26 of the world's biggest oil-consuming nations. ``I deplore this because it weighs on the global economy and it's a burden for the poorest people.''
The Organization for Economic Cooperation and Development lowered its forecasts for economic growth this year in the U.S. and Europe on Sept. 5. The group cut its forecast for the U.S. to 1.9 percent from a May figure of 2.1 percent and for the 13 nations sharing the euro to 2.6 percent from 2.7 percent.
OPEC may make $530 billion next year from oil exports, up from $508 billion this year and $506 billion in 2006, according to Leo Drollas, the deputy director of the Centre for Global Energy Studies in London.
OPEC forecasts world oil demand will expand by 1.34 million barrels a day next year, or 1.6 percent, to 87.06 million barrels a day.
``I assure you that if there's any shortage we will supply more crude to the market, but I think the market is really stable at this time,'' OPEC Secretary-General Abdalla El-Badri said in an Aug. 28 interview in Luanda, Angola.
Members are pumping more than their agreement allows. The 10 members with quotas produced 26.71 million barrels a day last month, or about 860,000 barrels a day more than targeted, according to Bloomberg estimates. The planned cutback, agreed to in two meetings late last year, was 1.7 million barrels a day.
``OPEC is already dealing with its dilemma by gradually leaking more oil onto the market,'' said Adam Sieminski, Deutsche Bank's chief energy economist in New York.
Iraq is allowed to export as much as possible to rebuild its oil industry after two wars. OPEC's newest participant, Angola, hasn't been assigned a limit. Crude output from all 12 OPEC members was 30.33 million barrels a day last month.
El-Badri said the 10 members with quotas have completed about 60 percent of their promised cutback and that any level above 65 percent would be ``fine.'' The organization hasn't set an official price target since abandoning a $22- to $28-a-barrel range in 2003, following the U.S.-led invasion of Iraq.
Ramon Espinasa, the former chief economist at state-run Petroleos de Venezuela SA, said OPEC members are content with prices and will seek a ``low profile'' meeting next week. He's now an economist at the Inter-American Development Bank in Washington.
Indonesia, the only OPEC member recommending an increase in supplies, pays government subsidies on domestic fuel sales and imports crude to meet demand. Saudi Arabia, OPEC's largest producer, hasn't stated its position yet.
An increase in U.S. mortgage defaults by sub-prime borrowers would become a concern for oil producers if it causes ``a recession,'' Qatari Oil Minister Abdullah bin Hamad al-Attiyah said.
Libya's top oil official, Shokri Ghanem, said in a Sept. 4 interview that OPEC's record revenue is offsetting the weakness of the U.S. dollar, higher development costs and losses from the late 1990s, when demand sagged because of the financial crisis in Asia.
``OPEC keeps saying that there is sufficient supply,'' said Ingrid Angermann, an economist at Dresdner Bank AG said in an interview in Frankfurt today. ``At $76 a barrel, I don't see any sign of sufficient supply.''
Bloomberg