OPEC begins output meeting, oil price firms

Thursday, October 14, 2010
VIENNA (AFP) - – OPEC, which pumps 40 percent of the world's oil, began a ministerial meeting here on Thursday to decide whether to change production levels amid a rise in demand, as the oil price edged up.
All indications are that the Organization of Petroleum Exporting Countries will decide against changing its official daily output of 24.84 million barrels, with OPEC kingpin Saudi Arabia saying it is happy with current oil prices.
In London, the benchmark price of oil edged up as the meeting began, gaining 59 cents to 83.60 dollars a barrel, but traders said a fall of the dollar against the euro was a driving factor.
OPEC meets periodically to set output with a view to supporting its members' revenues and oil sector investment.
Heading into Thursday's meeting at OPEC's Vienna headquarters, Saudi Arabian Oil Minister Ali al-Nuaimi told reporters: "We are happy with the market the way it is." Nuaimi had already said this week that there was no need for changes to output.
Crude oil prices have trade between 70 and 80 dollars for much of the past year but shot above 85 dollars a barrel on Thursday amid a pick-up in energy demand.
Other ministers similarly expressed satisfaction with the current situation.
"The price is a reflection of market fundamentals, we are happy with that," said Kuwait's minister Sheikh Ahmad Abdullah Al-Sabah.
Venezuelan minister Rafael Ramirez added: "We are satisfied that the market has more stability, the current price is comfortable for us."
However he added that he hoped the price next year would rise to between 90-100 dollars per barrel.
With no change in output seen as a done deal at Thursday's meeting, analysts suggested the cartel could call upon its members to show greater compliance with official production levels.
The International Energy Agency (IEA), which represents oil consuming nations, estimated that OPEC pumped nearly two million barrels a day above its official quota in September, as producers sought to boost revenues amid a pick-up in energy demand.
Quizzed about the apparent slippage in compliance, Nuaimi insisted it was not a problem.
"It's not affecting the market, which means the market needs whichever supply is being provided," the Saudi minister said.
"I think this is an ideal situation. The market is well supplied and demand is on the increase."
Both consumers and producers were happy with the current overshoot of production, he said.
"Nobody is complaining: the consumer is happy, the producer is happy, companies are investing."
Asked about a possible "double-dip" recession in industrialised countries, Nuaimi said: "I hope we don't have a double-dip. I think everybody is working very hard to avoid an economic slowdown."