OPEC oil ministers agreed Thursday to maintain crude production at existing levels, suggesting the group was happy with prices around $60 a barrel and available supplies ahead of the high-demand American summer driving season.
“The market is stable, the market is healthy,” OPEC Secretary General Abdalla Salem El-Badri of Libya told reporters. “We don’t need to touch it this time.”
Shokri Ghanem, head of Libyan oil policy and chief executive of Libya’s National Oil Co., agreed, saying: “There was no reason to cut production or to increase production because the market is balanced.”
Still, production could fall if ministers implement compliance with cuts agreed on in the past four months.
In meetings in Qatar in October and Nigeria in December, OPEC agreed to take a combined 1.7 million barrels a day off global oil markets as they sought to shore up sagging oil prices and shrink burgeoning inventories.
Actual cuts have been only about 1 million barrels a day. Still, they have helped to drive oil prices back from levels below $50 a barrel toward $60 a barrel. They also have dented global oil inventories, raising the prospect of OPEC having to lift production at some point this year — most likely to meet increased demand due to a jump in gasoline use during the summer driving season in the United States.
Although OPEC’s compliance with overall quotas is shaky, a decision to strictly observe the cuts would mean the organization taking another 700,000 barrels a day off the markets.
Oil prices edged higher Thursday after OPEC’s decision and figures showing that U.S. supplies of gasoline and other refined products fell. The market also got a lift as world markets rebounded from their sharp declines earlier in the week.
Qatar’s oil minister, Abdullah bin Hamad Al Attiyah, said OPEC was generally satisfied with output levels.
“I think compliance has been very good and also the ministers have given complete assurance that there will be continued commitment,” Al Attiyah said. He said for now, OPEC has agreed to meet again on Sept. 11 in Vienna and Dec. 5 in Abu Dhabi, in the United Arab Emirates.
Among those who reportedly backed keeping output steady — though possibly ending overproduction above agreed levels — is Saudi Arabia’s oil minister, Ali Naimi, whose country is OPEC’s No. 1 producer.
In comments carried by the Saudi-owned Al Hayat newspaper, Naimi said the “markets are comfortable, stocks are comfortable, so there is no need to change production,” adding that the two recent cutbacks were “good and appropriate” decisions.
In its monthly oil report on Tuesday, the International Energy Agency said that — without Iraq and Angola, which are not bound by quotas — daily OPEC oil production last month was at 26.8 million barrels a day. Total OPEC output last month averaged 30.2 million barrels — 400,000 barrels less than OPEC should produce to meet world demand, said the IEA, the energy watchdog of the world’s major industrialized countries.
OPEC, in its own monthly report issued Thursday, raised estimated output requirements, saying the organization needed to produce 180,000 more barrels a day between April and June than it forecast last month.
For the year, said the report, OPEC will need to boost output by a daily 150,000 barrels to 30.4. million barrels a day. It put global oil demand at 85.5 million barrels a day — up by about 100,000 barrels a day over its previous forecast.
The two cuts in the past four months have contributed to relative stability that has kept benchmark crude between $50 and $60 a barrel — down from the record highs of above $78 a barrel last summer, but still around 40 percent above 2004 levels.
Present prices leave comfortable profit margins both for producers and the major oil companies. Assuming economies are healthy, they also are below the pain threshold that leads to less world consumption.
“We seek prices that are stable, sustainable and acceptable to producers and consumers alike,” said Mohammed al-Hamli, the United Arab Emirates’ oil minister and OPEC president.
But despite apparent satisfaction with present price levels, al-Hamli expressed concern about the weak U.S. dollar, nothing that was “having a significant effect on the purchasing power of oil-producing developing countries in many parts of the world.”