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OPEC kingpins upbeat as ministers gather
2009-09-08
VIENNA (AFP) - Two leading OPEC crude producers gave an upbeat view of the oil market on Tuesday as member countries gathering here looked set to hold the flow of crude steady amid cautious talk of economic recovery. "The market is very stable and healthy," Saudi Arabian Oil Minister Ali al-Naimi said as he arrived Tuesday on the eve of a meeting of the Organization of Petroleum Exporting Countries (OPEC). He reiterated the view of several fellow OPEC ministers that further cuts to oil production quotas were unlikely and said Wednesday's meeting would focus on enforcing compliance with existing cuts "as best we can." Naimi told reporters "the market is in very good shape: very well-supplied," adding that "the price is good for everybody, consumer (and) producer." Iran's new oil minister Masoud Mirkazemi echoed Naimi's positive line and said no further cut in output was needed. "I think that the current situation (of the oil market) is getting better than before," he told reporters as he arrived in Vienna. After Saudi Arabia, Iran is the second-biggest oil producer and exporter among the 12 OPEC members, and is regarded as a "hawk" with a strong desire for higher prices. OPEC members, which pump 40 percent of the world's oil, agreed in late 2008 to remove a massive 4.2 million barrels of daily output from the market as it sought to prop up crumbling prices. The cartel's official daily output quota has stood at 24.84 million barrels per day since January but analysts say that compliance with the cuts has slipped over recent months. They blame overproduction mainly on Iran as well as on Angola, the current holder of the OPEC presidency, and Venezuela. Angola's oil minister Jose Maria Botelho de Vasconcelos told reporters on arriving on Tuesday that he thought the market was improving but cautioned: "There is some volatility in the market -- small, but volatility." He also pointed to high levels of crude stockpiles, which can depress prices, especially when demand is weak. A vicious global economic downturn has sapped demand for energy, dragging crude prices from record highs of above 147 dollars in July 2008 to 32.40 dollars in December. They have since recovered to hover around 70 dollars. Now ministers from OPEC countries, which are highly dependent on oil exports, must steer a careful course, supporting prices but not alarming markets by trying to do so too aggressively. Analysts say most member countries are satisfied with prices in the range of 70 to 80 dollars, enough to fund investment in future production. They stressed the tough situation facing the oil ministers as demand is expected to dip in the autumn months, however. Broadly, "it would be very unpopular if they tried to lower production," analyst Jason Schenker of the Texas-based consultancy Prestige Economics told AFP on Tuesday. On the other hand, "they're not likely to raise production because you have a number of supplying factors that are against that raise." Oil prices jumped back above 70 dollars on Tuesday, buoyed by Naimi's comments and improved investor sentiment about the global economy's recovery prospects, analysts said. New York's main contract, light sweet crude for October delivery, rallied 2.02 dollars to 70.04 dollars a barrel. Brent North Sea crude for October rose 2.09 dollars to 68.62 dollars.
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