VIENNA: OPEC chief Abdalla Salem El-Badri does not expect the oil organization to cut production at a key meeting next month, Dow Jones Newswires reported yesterday.
Despite signs of even weaker crude demand and swelling oil inventory in big energy consuming nations, the Organization of Petroleum Exporting Countries first needed to fully implement an agreement announced in December to remove 4.2 million barrels a day from world markets, El-Badri said in an interview. “We need to take all that off the market before we can talk about new cuts,” El-Badri said. Nevertheless, he did not want to pre-empt discussions at the meeting in OPEC’s Vienna headquarters on May 28, he insisted.
The organization’s 12 ministers “can come together and not hesitate to take action,” El-Badri said.
OPEC has reduced its oil production target by an overall 4.2 million barrels per day since September to 24.84 million bpd, the lowest since just after the US-led invasion of Iraq in 2003.
In its April monthly bulletin, the organization revised down its estimate for world crude demand this year and predicted that a “devastating contraction” in consumption would keep prices under pressure in the months ahead.
Last week, Iran’s Oil Minister Gholam Hossein Nozari said Tehran would back a cut in OPEC’s oil production at the May meeting if the crude market is oversupplied.
Meanwhile, oil prices jumped above $51 yesterday, winning support from the flagging dollar and rising stock markets, despite concerns about weak demand arising from the global economic downturn. Brent North Sea crude for delivery in June soared $1.43 to $51.54 a barrel in afternoon trade. New York’s main futures contract, light sweet crude for June, gained $1.60 to $51.22 per barrel. The “advance in crude continues to defy weak global demand,” said ODL Securities analyst Marius Paun. “This show of strength in the energy complex was rather driven by a weakening in the US dollar against the euro, combined with a renewed strengthening in the equity markets.”
Last week, oil prices had fallen as traders digested news of rising energy inventories in the United States — the world’s biggest oil-consuming nation.
“The fundamentals (of supply and demand) of oil are still poor and stocks are still plentiful,” said Petromatrix analyst Oliver Jakob.
The US Department of Energy (DoE) said Wednesday that American crude oil stockpiles had surged 3.9 million barrels in the week ending April 17 — marking the sixth weekly gain in a row.
Crude inventories in the United States are about 17 percent above their level at the same stage last year, and remain at the highest level since September 1990.