By Hector Igbikiowubo with Agency reports
VIENNA, AUSTRIA â€“ FEELERS gathered Monday at the headquarters of the Organisation of Petroleum Exporting Countries (OPEC) indicates that chances of member countries cutting output even further or increasing them are a remote possibility when the 154th meeting of the organisationâ€™s ministers holds tomorrow.
Oil prices are almost where member countries want them, with indications of a modest economic upturn in the offing. Prices have been hovering near $70 a barrel, and with returning growth expected to support demand, analysts donâ€™t expect that the Organisation of Petroleum Exporting Countries will feel any need to cut output targets.
â€œAbsolutely nothing,â€ said John Hall, of John Hall Associates in London. OPEC President Jose Botelho de Vasconcelos, who is also Angolaâ€™s oil minister, said last week that signs of recovery suggest the 12-member group wonâ€™t need to intervene.
â€œEverything shows they will keep output unchanged,â€ he said. Kuwait also says it thinks oil prices are stable and thereâ€™s no need to cut production, even though stockpiles are rising.
And Algeria, Kuwait, Libya, Qatar and the United Arab Emirates have signaled theyâ€™re happy with the current output quota of just under 25 million barrels a day.
Saudi Arabia, OPECâ€™s No. 1 producer and most influential member, has said $75 a barrel is a fair price for both consumers and producers – a level that would allow for continued investments in the oil sector without undermining efforts at global economic recovery. â€œUnless Saudi says, â€˜Weâ€™re going to cut by a million barrels a day,â€™ nothingâ€™s going to happenâ€ at Wednesdayâ€™s meeting, Hall said.
Benchmark crude for October delivery crested $68 a barrel Friday in electronic trading on the New York Mercantile Exchange. Over the past six weeks, it has fluctuated in the $65-$75 range amid conflicting signs of economic recovery.
OPEC meets more than a third of the worldâ€™s annual oil demand, which the International Energy Agency has put at nearly 86 million barrels a day for 2008 – about 2.5 million barrels more than for recession-ridden 2009.
The economic downturn has taken such a big bite out of demand for OPEC crude, it will take four more years just to recover to 2008 levels, the cartel predicts in its latest outlook. Still, stockpiles abound despite recent OPEC production cuts: The U.S. Energy Department said last month that U.S. crude stocks rose by 200,000 barrels for the week ended Aug. 21.
â€œWeâ€™re swimming in this stuff,â€ said Stephen T. Schork, president of The Schork Group in Villanova, Pa., and editor of a newsletter tracking industry trends.
Schork thinks OPEC may have to rein in output next March, but for now, oil prices â€œhave settled into a range that the market can sustain,â€ Schork said.
â€œOil thatâ€™s $65 to $75 per barrel translates into gasoline prices of $2.50-$2.75 a gallon, and we know the consumer can handle that,â€ he said. Crude prices have taken a wild ride over the past year or so: They peaked at $147 a barrel in July 2008 and plunged close to $30 this past February before settling into their current range.