Vienna, March 6:

Some price hawks in Organisation of Petroleum Exporting Countries (OPEC) are again calling for production cuts, but with oil still above $60 a barrel, the group is likely to keep output right where it is when it meets this week to set strategies for the spring and early summer.

A warmer-than-usual winter in the United States, the world’s largest consumer, has built inventories — which should drive prices lower. But worries about disruptions to supply from places like Iran or Nigeria are keeping prices high. That adds to the dilemma as the OPEC meets on Wednesday to look ahead to the traditionally low-demand season sandwiched between the heating-oil consuming winter and the driving-season summer.

“Certainly the producers that I have talked to are worried about the second quarter,” said Peter Gignoux, a London-based independent analyst, “They see demand tapering off and the prices moving lower. This thought process could be a driver at the meeting.” Venezula’s oil minister Rafael Ramirez has called for production cuts in anticipation of lesser demand, but analysts are betting that the 11-member organisation will put fears of volatility first and keep output unchanged due to consumer concerns about rising petrol prices, instability in Nigeria and the threat of attacks on Middle East pipelines.

The Paris-based International Energy Agency (IEA) estimates that global demand could be nearly two million barrels a day (bpd) lower in the second quarter than in the first three months of the year as winter gives way to warmer weather.

Still, oil producers are worried about sudden demand — and OPEC’s ability to keep pace — should Iran be slapped with economic sanctions over its nuclear program or should terrorists again strike oil facilities in Saudi Arabia and elsewhere.

While OPEC’s official production ceiling is 28 million barrels a day, the group’s members pumped nearly 30 million barrels a day in February, according to industry officials and analysts. That was up 320,000 barrels a day from January.

That rate leaves little cushion for a supply disruption. The IEA said in its most recent monthly report that OPEC’s usable spare capacity is now about 1.4 million barrels daily, or just 1.6 per cent of global oil consumption.

OPEC president Edmund Daukoru declined to speculate last week on whether the cartel would curtail production, but did say he was concerned about an ‘overhang’ of supply. “In the second quarter, we forecast an overhang of supply of maybe two million barrels a day,” Daukoru said, maintaining there isn’t enough refining capacity to handle that amount of supply.

Prices weaken

LONDON: World oil prices fell on Monday before two key meetings this week in Vienna — one on Iran’s nuclear programme and the other on OPEC production levels. New York’s main contract, light sweet crude for delivery in April, slid to $63.42 per barrel in electronic deals. In London, the price of Brent North Sea crude for April delivery dipped to $63.82 per barrel. The crude market will watch for the two meetings this week. The IAEA began its meeting on Monday in Vienna.— AFP