Opec ‘agrees’ to maintain oil output level

Opec ‘agrees’ to maintain oil output level

Vienna: Opec members have agreed to maintain the cartel’s oil production ceiling in the face of recovering crude prices, de-facto group head Saudi Arabia said here on Wednesday.

Ahead of an official announcement on output levels by the Organization of Petroleum Exporting Countries, Saudi oil minister Ali al-Nuaimi said ministers had reached agreement on leaving production at current levels.

“There is no question: there is agreement, yes," Nuaimi said.

Asked what Opec would formally decide at its ministerial meeting being held in the Austrian capital on Wednesday, he told reporters: “To keep things as they are. We are very happy with the situation as it is."

Opec’s 12 member countries have in recent days pointed to high oil inventories, low demand and recovering crude prices for reasons why the cartel which pumps 40% of the world’s oil does not need to change its ceiling.

Opec has had an official output level, excluding production by Iraq, of 24.84 million barrels a day since January 2009.

Asked if Opec should change the ceiling, Nuaimi said, “No. Absolutely not."

Oil prices, which tumbled from historic highs of more than $147 in July 2008 to about $32 in December in response to the global recession, have since clawed back ground on economic recovery hopes.

New York crude was trading above $82 following Nuaimi’s comments.

Algerian oil minister Chakib Khelil on Wednesday said current prices were “fair for both producers and consumers", as he confirmed that Opec was set to formally announce a freeze to its daily production target.

The outlook for prices very much depends on the strength of economic recovery following the recent severe downturn, according to analysts.

Andy Lipow of Lipow Oil Associates on Tuesday forecast crude futures to reach $90 to $95 by the end of 2010.

But they risk falling back from current levels should the recovery stall or countries fall back into recession.

Opec members have voiced concern that demand for oil could weaken as governments look to end unprecedented measures that have put countries on a road to economic recovery.

Oil prices rose on Wednesday one day after the Federal Reserve maintained record low interest rates.

The Federal Open Market Committee (FOMC) said it expected to hold the “exceptionally low" rate “for an extended period" -- reiterating its standard guidance since it slashed rates to record lows in December 2008 in a bid to jolt the world’s largest energy consumer from its worst recession in decades.

US treasury secretary Timothy Geithner on Tuesday warned jobless Americans they face a torrid year ahead, predicting continued high unemployment levels.

Markets are also worried that rising inflation in China may cause the Asian power to cool its overheating economy, in turn dampening energy demand in the world’s second biggest energy consuming nation.

Opec comprises Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.