OPEC Oil Ministers Likely to Opt for Maintaining Present Output Levels at Friday Meeting.
The U.S. and other nations facing slower economic growth think OPEC should open the taps wider so cheaper oil helps them avoid a recession. OPEC oil ministers meeting here Friday may think otherwise.
Participants and analysts say that ministers at the Vienna ministerial meeting of the Organization of Petroleum Exporting Countries are likely to keep output at current levels. That, in effect, would lock in prices at where they are now -- a bleak scenario for governments, businesses and consumers worldwide who have seen oil prices rise more than 50 percent from just over a year ago.
But worse can come. With prices at around $90 a barrel, natural catastrophes, a spike in Middle East tensions or other emergencies could drive prices beyond the $100 a barrel mark on worries that supplies may be crimped. The $100 a barrel mark was already slightly surpassed early this year.
Plunging prices could also be bad news -- a sign that failing economies cannot afford present energy costs. But members of the Organization of Petroleum Exporting Countries Nations say opening up the spigots would be counterproductive because there is enough crude to meet global demand. They argue that market speculation and geopolitical factors are the key drivers of oil prices.
"I don't believe there is a need for OPEC to do anything," said Shukri Ghanem, Libya's top oil official, on Wednesday, reflecting the prevailing view among his oil minister colleagues. "The market is well supplied."
Ecuador, Nigeria and Qatar are among other members of the 13-nation organization recently suggesting that they see no need to change production. That's even though Energy Secretary Samuel Bodman, speaking to Dow Jones Newswires on the sidelines of an energy conference in Abu Dhabi, said higher prices are a result of tight oil supplies.
David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney, said "the general expectation ... is that they will probably not change production quotas." And a Vienna-based diplomat tracking OPEC who demanded anonymity because the information was confidential said officials at the organization's headquarters in Vienna were saying privately that sentiment among ministers was strongly against putting more oil on the market.
That suggests that OPEC now views prices near or above $90 as acceptable. "The bottom line is the U.S. thus far has shown a tolerance for $90 plus a barrel, and the OPEC nations are of the mind that as long the U.S. is willing to pay such prices, they say, 'why not?'" said Anthony Sabino, Professor of Law and Business at St. John's University, in New York City.
The wild card, again, is OPEC powerhouse Saudi Arabia, the organization's No. 1 producer. If Saudi Oil Minister Ali Naimi pushes to hike production, the other 12 members might be swayed. But the Saudis have yet to comment either way.
The U.S. economic malaise -- and expectations of resulting reduced oil demand -- supports OPEC sentiment to leave production at present levels instead of upping output. So does the soft dollar. In arguing for more oil Monday, Bodman said U.S. government data showed a predicted decline in inventories held by the world's major industrialized countries this year. Just days before that, President Bush had expressed his concerns about a possible recession in the U.S. in making his case for increasing oil supplies during meetings with members of the Saudi ruling family and leaders of other OPEC countries.
In its weekly report issued Wednesday, the Energy Department's Energy Information Administration said crude-oil inventories rose last week for the third straight period. For the week ended Jan. 25, crude-oil inventories rose by 3.6 million barrels, or 1.2 percent, to 293 million barrels. While the stockpiles were 8.8 percent below year-ago levels, analysts had expected a gain of only 2.3 million barrels, according to a survey by Dow Jones Newswires.
Still -- although crude oil stocks rose 2.3 percent in the two weeks to Jan. 18, they were still 9.1 percent below levels a year ago. While OPEC kept its output on hold at its last meeting in December, it was concerned enough about high prices and potential market volatility to schedule Friday's special gathering.
Total OPEC output is estimated at about 31.5 million barrels a day -- about 40 percent of daily world demand believed to be around 85.5 million barrels, with the 12 OPEC members under quotas pumping nearly 30 million barrels a day.
The U.S. and other nations facing slower economic growth think OPEC should open the taps wider so cheaper oil helps them avoid a recession. OPEC oil ministers meeting here Friday may think otherwise.
Participants and analysts say that ministers at the Vienna ministerial meeting of the Organization of Petroleum Exporting Countries are likely to keep output at current levels. That, in effect, would lock in prices at where they are now -- a bleak scenario for governments, businesses and consumers worldwide who have seen oil prices rise more than 50 percent from just over a year ago.
But worse can come. With prices at around $90 a barrel, natural catastrophes, a spike in Middle East tensions or other emergencies could drive prices beyond the $100 a barrel mark on worries that supplies may be crimped. The $100 a barrel mark was already slightly surpassed early this year.
Plunging prices could also be bad news -- a sign that failing economies cannot afford present energy costs. But members of the Organization of Petroleum Exporting Countries Nations say opening up the spigots would be counterproductive because there is enough crude to meet global demand. They argue that market speculation and geopolitical factors are the key drivers of oil prices.
"I don't believe there is a need for OPEC to do anything," said Shukri Ghanem, Libya's top oil official, on Wednesday, reflecting the prevailing view among his oil minister colleagues. "The market is well supplied."
Ecuador, Nigeria and Qatar are among other members of the 13-nation organization recently suggesting that they see no need to change production. That's even though Energy Secretary Samuel Bodman, speaking to Dow Jones Newswires on the sidelines of an energy conference in Abu Dhabi, said higher prices are a result of tight oil supplies.
David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney, said "the general expectation ... is that they will probably not change production quotas." And a Vienna-based diplomat tracking OPEC who demanded anonymity because the information was confidential said officials at the organization's headquarters in Vienna were saying privately that sentiment among ministers was strongly against putting more oil on the market.
That suggests that OPEC now views prices near or above $90 as acceptable. "The bottom line is the U.S. thus far has shown a tolerance for $90 plus a barrel, and the OPEC nations are of the mind that as long the U.S. is willing to pay such prices, they say, 'why not?'" said Anthony Sabino, Professor of Law and Business at St. John's University, in New York City.
The wild card, again, is OPEC powerhouse Saudi Arabia, the organization's No. 1 producer. If Saudi Oil Minister Ali Naimi pushes to hike production, the other 12 members might be swayed. But the Saudis have yet to comment either way.
The U.S. economic malaise -- and expectations of resulting reduced oil demand -- supports OPEC sentiment to leave production at present levels instead of upping output. So does the soft dollar. In arguing for more oil Monday, Bodman said U.S. government data showed a predicted decline in inventories held by the world's major industrialized countries this year. Just days before that, President Bush had expressed his concerns about a possible recession in the U.S. in making his case for increasing oil supplies during meetings with members of the Saudi ruling family and leaders of other OPEC countries.
In its weekly report issued Wednesday, the Energy Department's Energy Information Administration said crude-oil inventories rose last week for the third straight period. For the week ended Jan. 25, crude-oil inventories rose by 3.6 million barrels, or 1.2 percent, to 293 million barrels. While the stockpiles were 8.8 percent below year-ago levels, analysts had expected a gain of only 2.3 million barrels, according to a survey by Dow Jones Newswires.
Still -- although crude oil stocks rose 2.3 percent in the two weeks to Jan. 18, they were still 9.1 percent below levels a year ago. While OPEC kept its output on hold at its last meeting in December, it was concerned enough about high prices and potential market volatility to schedule Friday's special gathering.
Total OPEC output is estimated at about 31.5 million barrels a day -- about 40 percent of daily world demand believed to be around 85.5 million barrels, with the 12 OPEC members under quotas pumping nearly 30 million barrels a day.
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