Opec to resist calls to aid recovery with more oil

Opec will probably maintain production levels when it meets in Vienna next week, resisting calls to ease the pressure of $100-a-barrel (Dh367) oil on the global economy, according to a survey of analysts by Bloomberg News. The Organisation of Petroleum Exporting Countries won't announce any supply increase and will keep its formal quota unchanged for an eighth consecutive meeting at the gathering next Wednesday, 27 of 30 analysts said. Brent crude rallied 22 per cent this year as conflict halted Libyan exports. The International Energy Agency, an adviser to importing nations, said on May 19 that there is "an urgent need" for more oil. Increase in quotas "This will be one of the most important Opec meetings of the past decade," said Johannes Benigni, managing director of Vienna-based consultant JBC Energy GmbH, who says Opec probably won't make the 2 million barrel increase in quotas he thinks is necessary. "The easier choice would be to calm the market with a statement that a hike is not necessary. However, this is a risky strategy, and could drive prices to $150." Economic growth is stalling in the U.S., the world's largest crude user, where consumers face the highest fuel prices in three years and unemployment remains at 9 per cent. Central bankers in Europe, China and India are tightening monetary policy as energy costs stoke inflation. Goldman Sachs Group Inc, JPMorgan Chase & Co and Morgan Stanley predict the rally in crude prices has further to go. The global "market is oversupplied," Saudi Arabian Oil Minister Ali Al Naimi, representing Opec's biggest member, said on April 17. Opec's Vienna-based secretariat said in its monthly report on May 11 that "uncertainties" about growth in developed economies undermine the need for additional supplies. Prices are now "more in line" with market conditions after a retreat in May, and this year's rally was driven by speculators and unfounded fears of disruption in Middle Eastern supply disruptions, the Opec report said. Qatar sees no urgency for Opec to raise output quotas at the conference next Wednesday, the country's Oil Minister Mohammad Saleh Al Sada said on Tuesday. Global oil markets are in a "healthy situation," he said. Oil stockpiles held by companies in Organization for Economic Cooperation and Development nations stood at 58.8 days worth of consumption in March, or 2.7 days higher than their five-year average, the IEA said in a report on May 12. In the US, crude inventories rose to a two-year high of 370.93 million barrels in the week to May 20, according to Energy Department data. The 11 Opec members bound by quotas are producing about 1 million barrels a day more than their collective target of 24.845 million a day. The group hasn't altered its target since December 2008, making this the longest-lasting quota since 1996. A 9 per cent drop in Brent futures from a 2 1/2-year high of $127.02 reached on April 11 may have eased the burden on the organization to change policy, said Jacob Correll, a commodity analyst at Summit Energy Inc in Louisville, Kentucky. Opec's "rhetoric that the market is well-supplied can now plausibly be backed up by the recent pullback in prices," Correll said. Rollover Iraqi Deputy Prime Minister Hussain Al Shahristani said in a television interview with Bloomberg News on May 25 he expects a rollover of quotas. "I don't see any shortage on the world market," he said. Other Opec ministers have yet to express a view on the meeting. The group has declined to comment on whether Libyan leader Muammar Gaddafi or the rebels opposing him will send representatives. The country's top oil official, Shokri Ganem, has defected to the rebels, Al Arabiya television and Italian news agency Ansa reported. It also isn't clear who will represent Iran, Opec's second-biggest producer, after President Mahmoud Ahmadinejad sacked the country's oil minister in a May 14 reshuffle and appointed himself as the ministry's caretaker. Economy and Finance Minister Shamseddin Hossaini will most likely represent Iran in Vienna, an Oil Ministry official said. The suspension of shipments from Libya since February has been the biggest supply disruption since the 2003 Iraq war, removing about 1.6 million barrels of daily output.