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OPEC leaves oil output target intact for another three months Signs of global economic recovery not strong enough to justify increasing production before summer, cartel members say after March 15 meeting by The Associated Press
OPEC announced March 15 that it would not change its oil production target until its members meet again in June to reassess market conditions, reflecting uncertainty over signs the economy is recovering.
The decision, approved in a five-hour meeting at the group’s Vienna headquarters, was expected to have only a slight impact on consumers.
Officials from the Organization of Petroleum Exporting Countries noted “encouraging signs” of a global economic recovery, but said the group’s members weren’t yet convinced that the recovery was robust enough to justify their pumping more oil before summer.
Oil ministers and officials were reluctant to say whether they were likely to increase output when they meet again on June 26, a time when demand for gasoline usually starts to rise as motorists take to the roads during the peak driving season.
“It depends on the circumstances,” OPEC President Rilwanu Lukman said at a news conference. “When June comes, we will see what the market is calling for.” Price within band OPEC’s benchmark price for crude rose in mid-March to within the cartel’s desired range, or band, of $22-$28 a barrel for the first time since September.
Saudi Oil Minister Ali Naimi said the economic data he had seen made it clear that OPEC needed to stick for now with its official output level of 21.7 million barrels a day.
“What I have today says the market is stable, inventories are on the high side (and) the price is within the band. We don’t need to do anything,” he told reporters.
Naimi, whose country is OPEC’s largest producer, said he was “very comfortable” and “relaxed” with the decision. “Now, what will happen in June? I have no idea until I see the data.”
His Iranian counterpart, Bijan Namdar Zangeneh, went further, saying OPEC would “probably” decide to increase output at its next meeting in June.
“We don’t want to make an artificial shortage,” he said.
OPEC’s 11 members supply about a third of the world’s crude.
Given OPEC’s decision to sit tight until June, Yasser Elguindi, an energy analyst for New York consultancy Medley Global Advisors, said he expected to see a gradual strengthening in retail gasoline prices, “but nothing that would be too outrageous.”
Jan Stuart, head of research for global energy futures at ABN Amro in New York, said U.S. pump prices would probably rise “a little higher” but not to the painful levels seen last year. Output down 5 million barrels OPEC has slashed 5 million barrels from its daily output target since October 2000 in an effort to prop up weak prices. The group cut its official production most recently by 1.5 million barrels a day in January, and its daily output target is now 21.7 million barrels.
Although demand for oil tends to rise during the second half of the year, Libyan Oil Minister Abdulhafid Mahmoud Zlitni said it was too early to predict whether the world’s economy will be robust enough to warrant an increase in crude supplies by then.
“All the facts and figures indicate that the market is now getting stabilized. There are signs of good improvement in growth rates throughout the world, but they’re not sustainable yet,” he said, echoing the cautious outlook of the majority of his OPEC colleagues.
Signs of a rebounding economy in the United States, which gobbles one out of every four barrels of oil produced, have helped to strengthen prices in recent weeks. So too has speculative buying of futures contracts on concerns that a U.S.-led attack might knock OPEC member Iraq out of the export market.
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