OPEC crude oil producers are keeping output steady after a meeting of the group this morning, our time.
Despite a mixed outlook for the world economy, with much of Asia growing solidly, and the US and Europe spluttering, the group accepted a recommendation from its production-monitoring committee to make no changes to output limits.
The meeting started late Wednesday night, European time because it fell in the season of Ramadan and the delegates could not meet before sunset (which was around 10 pm Vienna time.
They met as the US Government’s main energy adviser upgraded its previous forecasts for a continuing oil glut.
Global oil demand through next year will be weaker than previously forecast while petroleum supplies will be higher, the U.S. government said in a revised outlook on Wednesday.
The US Energy Information Administration said global oil demand in 2010 will be weaker than previously estimated because of falling demand in developed economies.
The EIA cut its forecast for world oil demand growth in 2010 by 30,000 barrels a day to daily demand figure of 84.58 million bpd., but it boosted its forecast for world production growth by 150,000 bpd to average output of 84.65 million bpd.
The EIA’s new monthly short-term energy forecast would mean a daily world oil supply surplus of 70,000 barrels.
The EIA said while its new outlook assumes the world economy starts recovering at the end of this year, weaker growth in developed economies will see demand fall by more than the expected rise in demand from better performing developing economies such as China and India.
The committee urged OPEC members to maintain compliance with agreed cuts as suggestions of ‘cheating’ continue with monitoring showing some members all but ignoring their quotas.
OPEC members, who pump 40% of the world’s oil, agreed in late 2008 to cut 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, which is facing a budget squeeze having overspent and handed out grants left right and centre throughout the developed world to buy acceptance.
Analysts say most member countries are satisfied with prices in the range of 70 to 80 US dollars, enough to fund investment in future production.
Oil prices jumped back above $US70 in late trading on Tuesday and continued around that level in Asia yesterday ahead of the meeting.
New York October futures contract ended at $US71.10 a barrel — more than $US3 higher than last Friday’s close before the long weekend in America.
It traded just above $US71 a barrel in Asia and Europe last night.
In London on Tuesday, Brent North Sea crude rose $US2.89 to $US69.42.
The weekly US oil stocks figures will be released tonight, our time, instead of Wednesday night because of the holiday on Monday.
They are the major weekly influence on prices and will come a day after the OPEC decision.
Bloomberg reported that "Saudi Arabian Oil Minister Ali al-Naimi, who represents OPEC’s biggest and most influential producer, said current oil prices are “good for everybody, consumers, producers,” adding to comments from other members of the group pointing to no change in output.
Qatar’s energy minister Abdullah bin Hamad al-Attiya however was gloomier, saying the outlook for oil demand was uncertain.
"I don’t think now is the right time to cut production," he told reporters here. "We don’t want to damage the world economy."
His Algerian counterpart Chakib Khelil forecast that prices would continue to strengthen, despite widespread economic uncertainty.
Iran’s new oil minister Masoud Mirkazemi echoed Naimi’s positive line and said no further cut in output was needed.
OPEC’s overall compliance now stands at 69% with Angola, which has not cut at all, and Iran, whose compliance stands at only 5%, the biggest offenders.
Iraq, though a member, is not part of the quota agreement because its oil industry had until recently been controlled by the United Nations and later the US.
