KUWAIT CITY, 15 November 2005 — Organization of Petroleum Exporting Countries (OPEC) President Ahmed Fahed Al-Sabah said yesterday that the organization has no intentions of cutting production despite a recent drop in oil prices.
OPEC, he also said, would wait until its meeting next month to decide policy for 2 million barrels per day (bpd) of surplus crude oil which it made available to world markets in September.
When asked by reporters at Kuwait’s Parliament if OPEC was considering a production cut, the organization chief gave a firm “no”. “We will continue to follow up the market. I think prices have started to be more stable. For that, until now, we don’t have to cut production,” Al-Sabah explained.
Crude oil prices have fallen over the past weeks to below $58 per barrel compared to the record $70 highs of August. During its September meeting in Vienna OPEC maintained its official production ceiling of 28 million bpd but offered an additional 2 million bpd of spare capacity to world markets. That offer began Oct. 1 and expires at the end of December. Al-Sabah, who is also Kuwait’s energy minister, said that OPEC members would wait until their Dec. 12 meeting in Kuwait to decide whether to extend the 2 million bpd offer, most of which would come from Saudi Arabia.
OPEC, he said, was not presently defending a specific price target. When asked at what price he would like to see crude oil sell this coming season, Al-Sabah said that since winter hadn’t really started yet, the cartel would have to monitor the market for a while. At this point OPEC doesn’t have a target for prices, he said. “The most important thing is supply and demand,” Al-Sabah said.
Oil analysts have attributed the recent downturn in prices to warm weather in the northern hemisphere, an increase of fuel stocks built up after the hurricane season in the US, and previous high prices that cooled demand.
Meanwhile, visiting US Energy Secretary Samuel Bodman said yesterday he was confident OPEC will decide to provide “sufficient” crude to the world market at its meeting next month in Kuwait.
“I expect that they (OPEC) will do that and I have no doubt that will be the outcome of the OPEC meeting,” in Kuwait on Dec. 12, Bodman told reporters at Kuwait airport before leaving to neighboring Qatar.
Bodman said he was confident as Kuwait and the United Arab Emirates — which he visited over the weekend — “have been giving indications of being very responsive and wanting to provide sufficient crude oil to the world markets.”
World oil prices were mixed yesterday. New York’s main contract, light sweet crude for delivery in December, climbed 22 cents to $57.75 per barrel in pit trading.
In London, the price of Brent North Sea crude for December delivery lost six cents to $54.93 per barrel in electronic dealing.
