OPEC set to freeze oil output
VIENNA: OPEC was set Wednesday to formally announce a freeze in the cartel's oil output ceiling in the face of recovering crude prices and uncertain economic recovery, member countries said.
Ahead of an official announcement on output levels by the Organization of Petroleum Exporting Countries, Saudi Oil Minister Ali al-Nuaimi said the cartel had reached agreement on leaving production at current levels.
"There is no question: there is agreement, yes," said Nuaimi, whose country is OPEC's biggest exporter of oil and the world's second biggest crude producer behind Russia.
Asked what OPEC would formally decide at its ministerial meeting being held in the Austrian capital on Wednesday, Nuaimi told reporters: "To keep things as they are. We are very happy with the situation as it is."
OPEC's 12 member countries have in recent days pointed to high oil inventories, low demand and recovering crude prices for reasons why the cartel which pumps 40 percent of the world's oil does not need to change its ceiling.
The organisation's president, Ecuadoran Oil Minister Germanico Pinto, on Wednesday said that while oil prices had "held up" since the cartel's last meeting in December, "the strength of the global economic recovery in 2010 remains uncertain and uneven."
Delivering the meeting's opening address, he said: "The main challenges today concern market stability at a time of much uncertainty in the world economy.
"While there has been an improvement in the oil market outlook in recent months, there is still a long way to go before we can feel at ease with the situation.
"Developments in the world economy, which remains balanced on a knife-edge of uncertainty, will continue to have a direct impact on the outlook in the coming months," said Pinto.
OPEC has had an official output level, excluding production by Iraq, of 24.84 million barrels a day since January 2009 after removing a massive 4.2 million barrels from the target level in a move aimed at halting a slide in prices.
Oil prices, which tumbled from historic highs of more than 147 dollars in July 2008 to about 32 dollars in December in response to the global recession, have since clawed back ground on economic recovery hopes.
New York crude was trading above 82 dollars ahead of OPEC's formal announcement.
Algerian Oil Minister Chakib Khelil on Wednesday said current prices were "fair for both producers and consumers," adding that OPEC was set to formally announce a freeze to its daily production target.
The outlook for prices very much depends on the strength of economic recovery following the recent severe downturn, according to analysts.
Andy Lipow of Lipow Oil Associates on Tuesday forecast crude futures to reach 90 to 95 dollars by the end of 2010.
But they risk falling back from current levels should the recovery stall or countries fall back into recession.
OPEC members have voiced concern that demand for oil could weaken as governments look to end unprecedented measures that have put countries on a road to economic recovery.
Oil prices rose on Wednesday one day after the Federal Reserve maintained record low interest rates.
Markets are also worried that rising inflation in China may cause the Asian power to cool its overheating economy, in turn dampening energy demand in the world's second biggest energy consuming nation.
OPEC comprises Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.