Organization of Petroleum Exporting Countries decided to keep oil production targets unchanged at its meeting in Vienna today as the slowing U.S. economy threatens to curb energy demand.
The decision was ``easy'' to make as oil market fundamentals are ``sound,'' Saudi Arabia's Oil Minister Ali al-Naimi said. The expected economic slowdown means the group's current production is sufficient to meet demand in the first quarter, Organization of Petroleum Exporting Countries President Chakib Khelil told a press conference.
The Organization of Petroleum Exporting Countries rebuffed a request from U.S. President George W. Bush for more oil and delayed discussion of a supply cut to bolster prices until March. Oil has slipped 9 percent from a Jan. 3 record of $100.09 a barrel.
``They are very concerned about increasing output at a time when there are big question marks about demand growth in the economy,'' said Mike Wittner, head of oil market research at Societe Generale SA in London. ``They have a lot of flexibility because there is another meeting a month from now.''
White House spokesman Tony Fratto said: ``We hope that they understand that their decisions on oil production have a real impact on the economy.'' Fratto is traveling with Bush to Kansas City for a fundraiser.
Crude oil for March delivery sank $1.75 to $90 a barrel on the New York Mercantile Exchange at 11:52 a.m. local time.
Altering Targets
Ministers from most of Organization of Petroleum Exporting Countries's 13 nations had already said this week there was no need to alter targets. The decision was expected by 90 percent of analysts polled by Bloomberg.
Organization of Petroleum Exporting Countries will meet in coming months to monitor economic conditions, including its next scheduled meeting on March 5 in Vienna. A conference of producing and consuming countries is planned for April 20-22 in Rome.
Venezuela's Oil Minister Rafael Ramirez and his Iranian counterpart Gholamhossein Nozari both said after today's meeting in Vienna that the group may need to cut supply at its next gathering to prevent oil inventories becoming too high.
The decision was ``easy'' to make as oil market fundamentals are ``sound,'' Saudi Arabia's Oil Minister Ali al-Naimi said. The expected economic slowdown means the group's current production is sufficient to meet demand in the first quarter, Organization of Petroleum Exporting Countries President Chakib Khelil told a press conference.
The Organization of Petroleum Exporting Countries rebuffed a request from U.S. President George W. Bush for more oil and delayed discussion of a supply cut to bolster prices until March. Oil has slipped 9 percent from a Jan. 3 record of $100.09 a barrel.
``They are very concerned about increasing output at a time when there are big question marks about demand growth in the economy,'' said Mike Wittner, head of oil market research at Societe Generale SA in London. ``They have a lot of flexibility because there is another meeting a month from now.''
White House spokesman Tony Fratto said: ``We hope that they understand that their decisions on oil production have a real impact on the economy.'' Fratto is traveling with Bush to Kansas City for a fundraiser.
Crude oil for March delivery sank $1.75 to $90 a barrel on the New York Mercantile Exchange at 11:52 a.m. local time.
Altering Targets
Ministers from most of Organization of Petroleum Exporting Countries's 13 nations had already said this week there was no need to alter targets. The decision was expected by 90 percent of analysts polled by Bloomberg.
Organization of Petroleum Exporting Countries will meet in coming months to monitor economic conditions, including its next scheduled meeting on March 5 in Vienna. A conference of producing and consuming countries is planned for April 20-22 in Rome.
Venezuela's Oil Minister Rafael Ramirez and his Iranian counterpart Gholamhossein Nozari both said after today's meeting in Vienna that the group may need to cut supply at its next gathering to prevent oil inventories becoming too high.
Bush said during a Jan. 15 visit to Saudi Arabia that Organization of Petroleum Exporting Countries should increase production and relieve the strain of rising energy costs. The Federal Reserve lowered its benchmark interest rate two days ago by half a percentage point to 3 percent, the second cut in as many weeks, to prevent the U.S. economy from sinking into a recession.
The world should be ``more concerned about the economy'' as there is ``plenty of oil,'' said OPEC's Khelil, who is also Algeria's oil minister.
Gasoline Consumption
Francisco Blanch, head of global commodities research at Merrill Lynch and Co., said oil consumption may not be dented that much by a slowdown in the U.S., where regular gasoline averaged $2.977 a gallon at the pump this week.
``Even under a case of U.S. recession, we are going to see a very, very mild downturn in demand in the U.S., if any,'' Blanch said in a Bloomberg Television interview today. ``We have a very harsh winter going on in China and we've seen already coal prices sky-rocketing there, so I think China might be demanding a fair amount of oil over the next few months,'' he said.
World oil demand will fall by 1.5 million barrels a day, or 1.7 percent of total consumption, in the second quarter from the first, as the end of winter in the Northern Hemisphere cuts heating fuel use, according to the International Energy Agency.
Partly for that reason, Organization of Petroleum Exporting Countries hasn't announced a supply increase in January or February since 2003, when members had to make up for production lost during a strike in Venezuela.
The collective target for 12 Organization of Petroleum Exporting Countries members remains 29.673 million barrels a day, Organization of Petroleum Exporting Countries's head of research Hasan Qabazard said today. Those nations produced about that amount in December when they pumped 29.73 million barrels a day, according to Bloomberg estimates. Iraq has no quota.
Oil Wealth
Organization of Petroleum Exporting Countries is expected to earn about $850 billion this year from oil exports, 26 percent more than in 2007, according to the U.S. Energy Information Administration. Money is being channeled into sovereign wealth funds such as the Abu Dhabi Investment Authority and Kuwait Investment Authority that are buying stakes in companies including Citigroup Inc. and Merrill Lynch.
Libya's $100 billion sovereign wealth fund will avoid buying U.S. assets because of politically motivated restrictions on investments by Arab states, Shokri Ghanem, the chairman of Libya's state-owned National Oil Corp., said in Bloomberg Television interview yesterday evening in Vienna.
The world should be ``more concerned about the economy'' as there is ``plenty of oil,'' said OPEC's Khelil, who is also Algeria's oil minister.
Gasoline Consumption
Francisco Blanch, head of global commodities research at Merrill Lynch and Co., said oil consumption may not be dented that much by a slowdown in the U.S., where regular gasoline averaged $2.977 a gallon at the pump this week.
``Even under a case of U.S. recession, we are going to see a very, very mild downturn in demand in the U.S., if any,'' Blanch said in a Bloomberg Television interview today. ``We have a very harsh winter going on in China and we've seen already coal prices sky-rocketing there, so I think China might be demanding a fair amount of oil over the next few months,'' he said.
World oil demand will fall by 1.5 million barrels a day, or 1.7 percent of total consumption, in the second quarter from the first, as the end of winter in the Northern Hemisphere cuts heating fuel use, according to the International Energy Agency.
Partly for that reason, Organization of Petroleum Exporting Countries hasn't announced a supply increase in January or February since 2003, when members had to make up for production lost during a strike in Venezuela.
The collective target for 12 Organization of Petroleum Exporting Countries members remains 29.673 million barrels a day, Organization of Petroleum Exporting Countries's head of research Hasan Qabazard said today. Those nations produced about that amount in December when they pumped 29.73 million barrels a day, according to Bloomberg estimates. Iraq has no quota.
Oil Wealth
Organization of Petroleum Exporting Countries is expected to earn about $850 billion this year from oil exports, 26 percent more than in 2007, according to the U.S. Energy Information Administration. Money is being channeled into sovereign wealth funds such as the Abu Dhabi Investment Authority and Kuwait Investment Authority that are buying stakes in companies including Citigroup Inc. and Merrill Lynch.
Libya's $100 billion sovereign wealth fund will avoid buying U.S. assets because of politically motivated restrictions on investments by Arab states, Shokri Ghanem, the chairman of Libya's state-owned National Oil Corp., said in Bloomberg Television interview yesterday evening in Vienna.
Source: Bloomberg |By Julie Ziegler and Ayesha Daya
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