Ministers: OPEC keeps output steady
VIENNA: OPEC has decided to keep its production targets unchanged, oil ministers said Thursday at a meeting in Vienna.
The 12-country oil cartel appears to be counting on a recovering world economy to lift crude prices without their having to cut back output.
The decision had been widely anticipated, with most oil ministers saying ahead of the meeting they expected the status quo to be kept unchanged. Even Oil Minister Golam Hossein Nozari of Iran — one of OPEC's price hawks — said Wednesday he expected OPEC to keep output at present levels.
Asked about a formal decision as ministers streamed out of their closed meeting Thursday, Nozari said: "Unchanged." And Saudi oil minister Ali Naimi said the Organization of the Petroleum Exporting Countries had decided to "stay the course."
An OPEC statement formally confirming the decision said the organization "reiterated their firm commitment" to their quotas — organization members under quotes are still producing more than 800,000 barrels a day above the group's overall target level of just under 25 million barrels.
The move to keep to the status quo appeared due to optimism that the U.S. — the world's largest oil consumer — is gradually emerging from a severe recession.
A barrel of crude already fetches more than $60 compared to levels near $30 just four months ago. And that spike has come despite continued anemic worldwide demand, plentiful supply, and gloomy future forecasts.
Benchmark crude for July delivery was down 21 cents to $63.24 a barrel by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange. Prices have not been at that high level since November.
Naimi on Wednesday suggested greater demand later this year would come only from Asia, with the U.S. and Europe continuing to lag.
Instead of being powered by demand, analysts say oil prices have risen because of international stock markets. But although stocks normally rise 6-9 months before the actual economy starts growing again, a series of economic reports have recently suggested that the recession is bottoming out, if not yet ending.
Some investors have been pushing up the price of oil by buying it as a hedge against a weaker U.S. dollar.
About 74 percent of the forecasters in a survey by the National Association for Business Economics in the U.S. expect the recession, which started in December 2007, to end in the third quarter. Another 19 percent predict the turning point will come in the final three months of this year and the remaining 7 percent believe the recession will end in the first quarter of 2010.