OPEC to Decide Oil Output amid Demand, Libya Strains
TEHRAN (Tasnim) – The Organization of Petroleum Exporting Countries meets this week to decide on the cartel's oil output against a backdrop of slowing crude demand and unrest in member nation Libya.
Supplying about one third of the world's oil, the cartel is expected to maintain its output ceiling of 30 million barrels per day when it meets at its Vienna headquarters on Wednesday, even though it is currently producing under the limit.
OPEC is seen sitting tight, with its dozen members largely appearing satisfied by current market prices for crude, as Brent wins strong support from rising unrest in Libya that has slashed the country's output.
Weighing on prices is a reduction in tensions over Iran following the OPEC member's recent deal with world powers to allow tighter oversight of its nuclear programme in exchange for modest sanctions relief.
New York crude in particular is being hit by rising US oil inventories.
OPEC will meanwhile use the meeting of its nation members from Africa, Latin America and the Middle East, to decide also on a new secretary general, or administrative head of the organisation that was founded in 1960.
"Oil prices are still well within the range most of the members are comfortable with, so there shouldn't be much case for cutting production," Thomas Pugh, commodities analyst at Capital Economics consultants, told AFP.
On Friday, New York's main contract, West Texas Intermediate (WTI) for delivery in January, stood at $93.58 per barrel.
Brent North Sea crude for January, the European benchmark, was at $110.93 a barrel.
"If you take an average of these two, we're roughly around the level of $100 that Saudi Arabia has been talking about as being the fair price," noted Harry Tchilinguirian, BNP Paribas' global head of commodity markets strategy.
OPEC kingpin Saudi, also the world's biggest producer of oil, argues that crude at $100 a barrel provides acceptable income for producers without weighing too heavily on consumers.
Ahead of the ministerial meeting, Kuwait Oil Minister Mustafa al-Shamali said he did not expect OPEC to alter its production level.
"I don't expect it to be changed because the production till now goes with the needs of consumers and that's enough," Shamali told reporters.
OPEC, pumping about 35 percent of the world's crude, forecasts that global oil demand will stand at 90.78 million barrels per day (mbpd) in 2014.