Enviado: 30/1/2005 20:00OPEC Keeps Quota, Drops Price Target as `Unrealistic' (Update5)
Jan. 30 (Bloomberg) -- OPEC, the producer of more than a third of the world's oil, agreed to leave output quotas unchanged and abandoned its price targets because members can do little to drive the oil market lower.
The Organization of Petroleum Exporting Countries will maintain its current quota of 27 million barrels a day, Iran's oil minister, Bijan Namdar Zanganeh, told reporters in Vienna today. Members will study a new price target, the minister said, because the current $22 to $28 a barrel goal is ``unrealistic.''
``Clearly they are paving the way for a significant increase of the oil price target,'' Kevin Norrish, an analyst at Barclays Capital, said in a telephone interview from London. ``This will be another strong year for oil as spare capacity staying low.''
OPEC last month agreed to reduce output just as winter weather in the U.S. and Europe boosted demand for heating oil, sending crude oil to $49.75 a barrel. OPEC said soaring prices haven't slowed world growth, and members will talk before their next meeting, in March, on when to lower supplies.
The group will be monitoring world oil inventories to decide whether to act before their March 16 meeting in Isfahan, Iran, said the Kuwaiti minister and OPEC president, Sheikh Ahmad Fahd al- Sabah. Inventories are now enough to meet 52 days of demand, and an increase to 56 days of demand would raise concern of a surplus, the minister said.
Output Levels
``The level of global oil supply, particularly OPEC output, exceeded demand, allowing commercial oil stocks to build to above their five-year average,'' the group said today in an e-mailed statement.
OPEC this month has lowered output by 800,000 barrels a day to 29.6 million a day, according to estimates from Geneva-based consultant PetroLogistics Ltd., which tracks tanker movements. The total includes Iraq, which is excluded from the quota system.
``They are concerned about stockpiles building in the second quarter,'' Norrish said. ``The question this year is, `Can they increase capacity faster than the demand growth?'''
The Saudi oil minister, Ali al-Naimi, told reporters yesterday that OPEC needs to invest in its oil fields and expand production capacity to meet rising energy demand.
The group expects to have 2.5 million barrels a day of spare production capacity by the end of the year, Sheikh Ahmad said today at a press conference in Vienna.
Economic Impact
OPEC in 2004 failed to anticipate surging crude oil demand in China, and in March lowered production targets to 23.5 million barrels a day. Supply increases in July and August didn't stop prices from reaching a record $55.67 in New York in October.
OPEC should keep the U.S. benchmark crude oil price at between $45 and $55 a barrel, Edmund Daukoru, Nigeria's delegate, said today. Iran's minister said OPEC should seek oil between $30 and $40 a barrel. The Kuwaiti minister said $32 to $35 was acceptable.
The London-based Centre for Global Energy Studies expects OPEC to target an average price of $40 a barrel for its benchmark oil index. Saudi Arabia, OPEC's largest oil producer and its most influential member, will seek to keep prices above $35 a barrel, said the CGES, which is owned by former Saudi Arabian Oil Minister Sheikh Ahmed Zaki Yamani.
OPEC's Price
The OPEC price benchmark was last at $41.88 a barrel. Most OPEC oil sells at a discount to futures prices because its members pump lower grades of crude. Two OPEC committees will advise ministers on their study of a new price target at the next meeting. The Algerian minister, Chakib Khelil, said a decision may be made then on the price target.
``The question is how the market receives the removal of the band,'' said Roger Diwan, managing director of markets and countries for consulting company PFC Energy. ``It just signals that $40 to $50 (a barrel) is the range.''
Crude oil fell Friday, losing $1.66 a barrel, or 3.4 percent, to $47.18 a barrel on the New York Mercantile Exchange on expectations OPEC will do nothing at its meeting.
``Having done nothing is going to be a bit of a temptation to the speculators to short the prices to see what OPEC's reaction will be,'' said Adam Sieminski, oil strategist at Deutsche Bank AG in London. ``At some point presumably they will have to cut'' unless demand jumps or supply is reduced in places such as Iraq.
Jan. 30 (Bloomberg) -- OPEC, the producer of more than a third of the world's oil, agreed to leave output quotas unchanged and abandoned its price targets because members can do little to drive the oil market lower.
The Organization of Petroleum Exporting Countries will maintain its current quota of 27 million barrels a day, Iran's oil minister, Bijan Namdar Zanganeh, told reporters in Vienna today. Members will study a new price target, the minister said, because the current $22 to $28 a barrel goal is ``unrealistic.''
``Clearly they are paving the way for a significant increase of the oil price target,'' Kevin Norrish, an analyst at Barclays Capital, said in a telephone interview from London. ``This will be another strong year for oil as spare capacity staying low.''
OPEC last month agreed to reduce output just as winter weather in the U.S. and Europe boosted demand for heating oil, sending crude oil to $49.75 a barrel. OPEC said soaring prices haven't slowed world growth, and members will talk before their next meeting, in March, on when to lower supplies.
The group will be monitoring world oil inventories to decide whether to act before their March 16 meeting in Isfahan, Iran, said the Kuwaiti minister and OPEC president, Sheikh Ahmad Fahd al- Sabah. Inventories are now enough to meet 52 days of demand, and an increase to 56 days of demand would raise concern of a surplus, the minister said.
Output Levels
``The level of global oil supply, particularly OPEC output, exceeded demand, allowing commercial oil stocks to build to above their five-year average,'' the group said today in an e-mailed statement.
OPEC this month has lowered output by 800,000 barrels a day to 29.6 million a day, according to estimates from Geneva-based consultant PetroLogistics Ltd., which tracks tanker movements. The total includes Iraq, which is excluded from the quota system.
``They are concerned about stockpiles building in the second quarter,'' Norrish said. ``The question this year is, `Can they increase capacity faster than the demand growth?'''
The Saudi oil minister, Ali al-Naimi, told reporters yesterday that OPEC needs to invest in its oil fields and expand production capacity to meet rising energy demand.
The group expects to have 2.5 million barrels a day of spare production capacity by the end of the year, Sheikh Ahmad said today at a press conference in Vienna.
Economic Impact
OPEC in 2004 failed to anticipate surging crude oil demand in China, and in March lowered production targets to 23.5 million barrels a day. Supply increases in July and August didn't stop prices from reaching a record $55.67 in New York in October.
OPEC should keep the U.S. benchmark crude oil price at between $45 and $55 a barrel, Edmund Daukoru, Nigeria's delegate, said today. Iran's minister said OPEC should seek oil between $30 and $40 a barrel. The Kuwaiti minister said $32 to $35 was acceptable.
The London-based Centre for Global Energy Studies expects OPEC to target an average price of $40 a barrel for its benchmark oil index. Saudi Arabia, OPEC's largest oil producer and its most influential member, will seek to keep prices above $35 a barrel, said the CGES, which is owned by former Saudi Arabian Oil Minister Sheikh Ahmed Zaki Yamani.
OPEC's Price
The OPEC price benchmark was last at $41.88 a barrel. Most OPEC oil sells at a discount to futures prices because its members pump lower grades of crude. Two OPEC committees will advise ministers on their study of a new price target at the next meeting. The Algerian minister, Chakib Khelil, said a decision may be made then on the price target.
``The question is how the market receives the removal of the band,'' said Roger Diwan, managing director of markets and countries for consulting company PFC Energy. ``It just signals that $40 to $50 (a barrel) is the range.''
Crude oil fell Friday, losing $1.66 a barrel, or 3.4 percent, to $47.18 a barrel on the New York Mercantile Exchange on expectations OPEC will do nothing at its meeting.
``Having done nothing is going to be a bit of a temptation to the speculators to short the prices to see what OPEC's reaction will be,'' said Adam Sieminski, oil strategist at Deutsche Bank AG in London. ``At some point presumably they will have to cut'' unless demand jumps or supply is reduced in places such as Iraq.