Consumers, led by top fuel burner the United States, have urged the Organization of the Petroleum Exporting Countries to produce more oil in an attempt to cool prices and to limit economic slowdown. US crude hit a new record of $103.95 on Monday. OPEC ministers have said prices have been driven by factors beyond their control, including a weak dollar and political tension, and not by a lack of oil. OPEC President Chakib Khelil said the group’s two options, when it meets on Wednesday in Vienna were to keep output steady or to reduce it. “I don’t think OPEC would consider increasing production because then we would be increasing to meet demand that doesn’t exist,” Khelil told reporters. Given that inventories are already high, he said an output increase would not lower prices. Stocks could rise further during the fall in demand that typically takes place in the Q2 after winter ends, as well as by the impact of a slowdown in the US economy. “The economic slowdown in the United States definitely has an effect on world economic growth, which will have an impact on world petroleum demand this year,” Khelil said. OPEC’s most influential member Saudi Arabian Oil Minister Ali al-Naimi made no comment on his arrival.
High process a worry
An OPEC source said no change would be a logical decision, but the strength of oil prices meant ministers might talk about raising production slightly. “The fundamentals do not support this, but the price is clearly too high,” the source said. Another OPEC source said there was an argument for leaving output unchanged for the rest of the year. The latest government data showed US crude inventories had risen for a seventh week in a row, while gasoline stockpiles reached their highest for 14 years. OPEC, which pumps more than a third of the world’s oil, last met on Feb. 1, when it left output unchanged. It has not agreed a formal increase since September last year. A Reuters survey found OPEC output fell slightly in February, the first decline since August last year. The group is now pumping only 110,000 barrels per day above its agreed target. Any formal deal on Wednesday to hold supplies steady would leave latitude for quietly adjusting output to reflect demand. In addition, ministers are likely to call an extraordinary meeting in the next month or two to review the situation, delegates said. (Reuters)
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