Kuwait: Opec is likely to keep oil production targets unchanged when it meets in September on expectations that demand will strengthen over winter as the global economic recovery gathers pace, a senior Gulf Opec delegate told Reuters on Sunday.
“According to (the) current circumstances of supply and demand, possible demand during winter and the start of an economic recovery, they (ministers) might keep things as they are until the next meeting,” the delegate said.
The Organization of the Petroleum Exporting Countries (Opec), supplier of more than a third of the world’s oil, will again call on its members to adhere closely to production quotas when it meets on 9 September in Vienna to set policy, he said.
“Compliance will be discussed and emphasised during the meeting,” he said.
Last year, Opec agreed to cut output by 4.2 million bpd, which is equal to about 5% of daily world demand, from its output levels to prop up slumping prices. Opec has kept output targets steady to date this year.
Output discipline has declined from a record level of 80% early this year to 71% of promised curbs in July as rising oil prices and the prospect of recovering demand may be encouraging members to pump out extra barrels, analysts said.
US crude for October settled at $72.74 a barrel on Friday, close to the $75 that Opec countries, including top oil exporter Saudi Arabia, have said is needed for investment in future energy supplies.
The fundamentals of supply and demand were currently balanced, and demand was expected to rise during the fourth-quarter and the first-quarter of 2010, the delegate said.
“Fundamentals are good, taking into account the winter approach and signs of recovery of the global economy. Stocks are higher than average but the feeling about the future is very positive,” he said.
“In the fourth quarter and the first quarter, demand will pick up. It has already started to pick up.”
Major forecasters are expecting a rise in energy demand next year following a steep contraction this year, but they are not expecting any growth to be rapid.
The International Energy Agency (IEA) said stocks in developed countries stood at around 61.7 days of forward cover at the end of June, around 10 days more than Opec considers comfortable.
Opec officials remain concerned about when demand would be strong enough to reduce high global oil inventories. But they are also wary of making any further cuts to supply that may drive up the oil price and slow down economic recovery.
Some Opec members such as Kuwait and Nigeria saw no need for Opec to change oil supply targets at its meeting next month, while others such as Iraq and Venezuela did not expect Opec to raise output.