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22 April 2024

Opec rejects consumer calls, output unchanged

By Agencies



Opec oil producers on Friday kept oil supplies unchanged despite worries that $90-a-barrel crude is causing difficulty for slowing economies in the West.

The Organization of the Petroleum Exporting Countries will meet again on March 5 when some in the cartel may press for a cut in production to defend prices against a drop in demand should recession bite in the United States.

Washington led an appeal for more crude from Opec, saying that lower fuel costs would bolster its slowing economy.

But powerful Saudi Oil Minister Ali al-Naimi said global supply and demand were in balance.

"The condition of the market is sound currently, supply and demand are equal and global reserves are fine," Naimi said, Al Hayat newspaper reported.

US crude traded down 33 cents at $91.42 a barrel.

"No surprise with this decision," said analyst Simon Wardell at Global Insight.

"I think the instinct is to cut, but with a meeting next month they were always likely to wait until then to make the cut they believe is needed. They want to balance consumer concerns over the global economy with their own desire to support prices and ensure government revenues continue to accumulate."

Leading price hawks Venezuela and Iran already are suggesting Opec may need to consider an output cut at the group's March meeting to put a floor under prices.

"Maybe, maybe. We have to be very careful and keep a close watch on inventories," said Venezuelan Oil Minister Rafael Ramirez.

"Yes, if inventories go up and the market is well supplied," said Iranian Oil Minister Gholamhossein Nozari.

Delegates say Saudi would prefer lower prices to ease recessionary pressures that will dampen demand for Opec 's oil.

That could mean a tussle between price hawks keen to defend prices and those concerned that an overly robust defence of the market could accelerate an economic downturn.

Saudi's Naimi said Riyadh now was pumping at 9.2 million barrels daily, well in excess of its Opec allocation of 8.94 million bpd.

Traders say that would suggest he is making a discreet effort to ease prices -- normally at this time of year Saudi would be reducing output ahead of a seasonal second quarter drop in demand.

During a six-year rally Opec has often claimed it was powerless to influence oil prices, often blaming speculators for a bull run that took crude over $100 a barrel in early January.

Driven by rising Chinese demand and global growth of some 5 per cent, the world economy proved able to cope with inflated fuel prices.
As global growth slows, oil markets will be watching closely to see how far Opec dare intervene with supply curbs to prevent prices from falling. (Reuters)