Abu Dhabi: Opec president Jose Botelho de Vasconcelos said on Monday it was still too early for the oil exporters’ group to make a decision on production changes before its December meeting, as the market remained oversupplied.
The Organization of the Petroleum Exporting Countries will meet in Luanda, Angola, on 22 December to decide on its oil production policy.
“The situation is not (yet) stabilised... I think the market has, at this time, a lot of stocks... and we need to wait until the meeting,” he told Reuters.
Botelho de Vasconcelos said the market was still “a little bit” oversupplied, putting current global oil inventories now about 62 days of forward cover.
“Ideally the forward cover should be around 52 to 53 days,” he told reporters later, ahead of a speech on energy security.
The International Energy Agency (IEA) last week said that stocks of oil in OECD countries remained very high at the equivalent of 60 days of forward demand at the end of September, down from 60.9 days at the end of August.
Compliance in the producer group with its output targets was currently around 65%, he said. The IEA, which advises 28 industrialised economies, said last week that compliance among the group’s members had slipped.
“I’m happy with compliance, I think our organisation is at 65 percent,” Botelho de Vasconcelos said.
Opec has kept official output targets unchanged at meetings this year, after it agreed to curb output by 4.2 million barrels per day (bpd) last year.
The Opec president said $80 per barrel was a good price for oil.
“It is not high, it is a good price,” he said.
Global oil prices have rebounded nearly 73% so far this year, having fallen about 54% in 2008.
Prices have received a boost from a weaker dollar and rallying equities markets amid signs of stronger global growth.
On Monday US crude futures for December delivery rose $1.06 to $77.41 a barrel by 1:21pm, regaining most of last week’s 1.4% losses.
Botelho de Vasconcelos said Opec should also look carefully at how oil was currently priced and consider the alternatives.
“We don’t know...it is an issue that we must do some reflection on,” he said when asked if Opec was thinking of changing the pricing of oil, currently in dollars, to alternative currencies.
A long-running debate over the currency used for commodity dealings was revived again in October by a British newspaper that said China, Japan, Russia and France were in secret talks with Gulf Arab states to stop using the dollar for oil trading.
Big oil producers denied it at the time, but dollar weakness has kept alive the question of whether it can remain the world’s reserve currency.
Opec is projecting global oil demand to grow by 20 million bpd to 106 million bpd by 2030, Botelho de Vasconcelos said in a speech.
“Projections are based on present trends and expected patterns of behaviour, the reality may turn out to be different in an uncertain world.”
Opec’s monthly report last week raised its estimate for 2010 oil demand growth to 750,000 bpd compared with its projection of 700,000 bpd the previous month.
It said most signs pointed towards gradual growth in fuel consumption, but there were risks to the downside.