PARIS (AFP) – The Organisation of Petroleum Exporting Countries signalled that the cartel would keep pumping crude at currently high levels even though crude prices have cooled recently.
“Cutting the production has little chance. The most we can do is to stay at the (current) quota,” OPEC acting secretary-general Maizar Rahman said at a forum in Manila Thursday.
With the cartel set to meet on December 10 in Cairo to discuss production policy, members have been sending out signals about their position on output.
In contrast to Rahman’s comments, Iran suggested recently that a production cut might be necessary in order to avert a drop in prices. For its part, Venezuela has given contradictory signs.
OPEC’s current production quota, excluding Iraq, is 27 million barrels per day although its real output, including Iraq, is thought to be closer to 30 million bpd, an exceptionally high level.
Experts estimate that the global oil industry is currently pumping at 99 percent of maximum capacity, with OPEC countries producing at full capacity.
Against that backdrop, Rahman said a cut in production would be “psychologically negative” for the market, adding that OPEC did “not want to give the market bad news.”
In Jakarta, Indonesia, OPEC president Purnomo Yusgiantoro said the group would likely decide to maintain its current production quota at next week’s meeting.
“There’s this thought that, during the first quarter (of 2005), prices will remain high because of geopolitical problems and because our oversupply has come down to 1.0-1.5 million barrels (per day),” Yusgiantoro said.
At the beginning of the week, OPEC’s most influential member, Saudi Arabia, also indicated that it did not want to rein back its production for the time being.
The kingdom’s oil minister Ali al-Nuaimi said Saudi Arabia had even made plans to increase its oil production capacity to 12.5 million barrels per day from the current 11.0 million “over the next few years”.
He said that in the long term “scenarios to raise the capacity to 15.0 million barrels per day can be set in motion if the global demand requires it”.
The situation on oil markets appears to be less tense than it was in October, when US benchmark crude West Texas Intermediate hit an all-time high in New York of 55.67 dollars per barrel in New York.
On Thursday, Brent North Sea crude oil plunged below 40 dollars for the first time in three months in London, to 39.50 dollars a barrel, on fading supply fears at the start of the northern winter.
And New York crude plummeted 2.19 dollars to 43.30 dollars a barrel, having already fallen more than three dollars Wednesday.
The New York price has crumbled by 11.9 percent since the sell-off began on Wednesday after the publication of US stocks data showed the world’s biggest consumer of oil was better supplied going into the winter months, when consumption is high for heating purposes, than had been expected.
With pressure on stocks easing, geopolitical tensions, strong demand and bottlenecks along the refining process are keeping the oil market edgy.
The head of the International Energy Agency, Claude Mandil, said Monday that the oil market had become more “reasonable” again although prices remain “quite expensive”.
OPEC producers “have worked hard in the last few months and have done everything they could to ensure that prices become reasonable again”, he said, adding: “I hope they are going to continue.”