Bloomberg reported that OPEC will probably maintain production levels when it meets in Vienna next week, resisting calls to ease the pressure of USD 100 per barrel oil on the global economy.
27 of 30 analysts said that the Organization of Petroleum Exporting Countries won't announce any supply increase and will keep its formal quota unchanged for an eighth consecutive meeting at the gathering next Wednesday. Brent crude rallied 22% this year as conflict halted Libyan exports.
Mr Johannes Benigni MD of Vienna based consultant JBC Energy GmbH said that "This will be one of the most important OPEC meetings of the past decade. OPEC probably won't make the 2 million barrel increase in quotas he thinks is necessary. The easier choice would be to calm the market with a statement that a hike is not necessary. However, this is a risky strategy and could drive prices to USD 150."
Mr Ali Al Naimi oil minister of Saudi Arabia representing OPECs biggest member said recently that economic growth is stalling in the US, the world's largest crude user, where consumers face the highest fuel prices in three years and unemployment remains at 9%. Central bankers in Europe, China and India are tightening monetary policy as energy costs stoke inflation. Goldman Sachs Group Inc, JPMorgan Chase & Company and Morgan Stanley predict the rally in crude prices has further to go. The global market is oversupplied.
OPEC's Vienna based secretariat said in its monthly report that uncertainties about growth in developed economies undermine the need for additional supplies. Prices are now more in line with market conditions after a retreat in May and this year's rally was driven by speculators and unfounded fears of disruption in Middle Eastern supply disruptions.
Mr Mohammad Saleh Al Sada oil minister of Qatar said that Qatar sees no urgency for OPEC to raise output quotas at the conference next Wednesday. Global oil markets are in a healthy situation.
The 11 OPEC members bound by quotas are producing about 1 million barrels per day more than their collective target of 24.845 million per day. The group hasn't altered its target since December 2008, making this the longest lasting quota since 1996.
Mr Jacob Correll a commodity analyst at Summit Energy Inc in Louisville, Kentucky said that a 9% drop in Brent futures from a 2 1/2-year high of USD 127.02 reached on April 11 may have eased the burden on the organization to change policy. OPEC's rhetoric that the market is well supplied can now plausibly be backed up by the recent pullback in prices.
