THE Organisation of Petroleum Exporting Countries (Opec) will agree next week to keep production levels unchanged as rising prices have eased pressure on budgets and there are hints of economic recovery over the next year, an agency report said on Thursday.
Eleven of 12 oil analysts and economists surveyed by the agency predicted the group would maintain output and stress again the need for adherence to existing quotas when they meet in Vienna on May 28.
One dissenting analyst said Opec needed to cut production by as much as 1 million barrels per day (bpd) to drain inventories. "Output cuts will not really be on the agenda next week," Frank Schallenberger, head of commodity research at Landesbank, said. "With prices around $60 per barrel, the situation has changed a lot from the last meeting on March 15."
Oil prices have risen sharply over the last three months with benchmark US crude oil futures reaching a six-month high of more than $62 on Wednesday from around $34 in February and a low of $32.40 in December.
On Thursday oil prices fell more than a dollar to below $61 a barrel, after hitting a six-month high in the previous session on expectations of a rebound in the world economy. US crude for July delivery was down $1.93 a barrel at $60.11 by 22:00 pm locally. It had settled at $62.04 a barrel, before trading up to a six-month high of $62.26 in post-settlement activity. London Brent was down $1.56 at $59.03 a barrel.
Economists calculate that at $40 per barrel, 11 of Opec's 12 members, as well as non-members Russia and Mexico, faced budget deficits. But with the market around $60, most of the oil exporters are much more comfortable and can avoid the difficult question of how and where to cut output if it needs to be trimmed. The key problem for Opec is a world-wide collapse in the use of oil since the economic crisis took hold last year.
The International Energy Agency (IEA), adviser to 28 industrialised countries, believes global oil demand will be more than 2.5 million bpd lower this year than in 2008 at around 83.2 million bpd and this will cut sharply demand for Opec oil. The group has said it would cut 4.2 million bpd from its production levels last September and, at its most disciplined, managed to deliver around 80% of the promised cuts. Some analysts have said compliance has slipped slightly as prices have risen and Opec's own monthly report pegged it at 77%. Venezuela, Angola, Nigeria and Iran have all been accused of over producing. Will Opec change its oil production targets on May 28? — Reuters
Eleven of 12 oil analysts and economists surveyed by the agency predicted the group would maintain output and stress again the need for adherence to existing quotas when they meet in Vienna on May 28.
One dissenting analyst said Opec needed to cut production by as much as 1 million barrels per day (bpd) to drain inventories. "Output cuts will not really be on the agenda next week," Frank Schallenberger, head of commodity research at Landesbank, said. "With prices around $60 per barrel, the situation has changed a lot from the last meeting on March 15."
Oil prices have risen sharply over the last three months with benchmark US crude oil futures reaching a six-month high of more than $62 on Wednesday from around $34 in February and a low of $32.40 in December.
On Thursday oil prices fell more than a dollar to below $61 a barrel, after hitting a six-month high in the previous session on expectations of a rebound in the world economy. US crude for July delivery was down $1.93 a barrel at $60.11 by 22:00 pm locally. It had settled at $62.04 a barrel, before trading up to a six-month high of $62.26 in post-settlement activity. London Brent was down $1.56 at $59.03 a barrel.
Economists calculate that at $40 per barrel, 11 of Opec's 12 members, as well as non-members Russia and Mexico, faced budget deficits. But with the market around $60, most of the oil exporters are much more comfortable and can avoid the difficult question of how and where to cut output if it needs to be trimmed. The key problem for Opec is a world-wide collapse in the use of oil since the economic crisis took hold last year.
The International Energy Agency (IEA), adviser to 28 industrialised countries, believes global oil demand will be more than 2.5 million bpd lower this year than in 2008 at around 83.2 million bpd and this will cut sharply demand for Opec oil. The group has said it would cut 4.2 million bpd from its production levels last September and, at its most disciplined, managed to deliver around 80% of the promised cuts. Some analysts have said compliance has slipped slightly as prices have risen and Opec's own monthly report pegged it at 77%. Venezuela, Angola, Nigeria and Iran have all been accused of over producing. Will Opec change its oil production targets on May 28? — Reuters
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