Most OPEC oil ministers held the line on Sunday that current output is sufficient to meet demand, but the world’s biggest exporter Saudi Arabia was silent ahead of a September 11 meeting to chart production policy.
The group that supplies more than a third of the world’s oil will consider conflicting economic signals at Tuesday’s talks when it sets production levels for peak winter demand.
Industrialized consumer nations represented by the International Energy Agency are forecasting their crude oil stocks will fall to the bottom of the five-year average range by January unless OPEC pumps more crude oil, and fast.
But uncertainty over the U.S. economy -- last month employers cut jobs for the first time in four years -- has cast doubt over oil demand growth in the world’s top consumer. There is concern that credit turmoil stemming from U.S. subprime loans -- risky mortgages -- might hit the real economy.
“After looking at the data, we see low inventories -- especially in the United States -- and uncertainty over GDP growth and oil demand,” a source on OPEC’s Economic Commission Board said at the end of a two-day meeting on Saturday.
OPEC will take account of the ECB’s findings at Tuesday’s meeting. It will also consider recommendations put forward by its Ministerial Monitoring Committee, which meets Monday.
Key to any OPEC decision is the view of Saudi Arabia, which pumped 8.65 million barrels per day of OPEC’s total August production of 30.37 million bpd, according to Reuters data. The kingdom also has the bulk of OPEC’s spare production capacity.
Saudi Oil Minister Ali Al-Naimi has declined comment since arriving in Vienna late on Friday. He has not responded to a report by Washington-based consultancy PFC Energy suggesting Saudi Arabia favors an output boost of up to one million bpd.
“PFC Energy understands that Saudi sources have been signaling that OPEC need to consider a production increase of 500,000 bpd to 1.0 million bpd at next week’s ministerial meeting,” PFC said in the report, released late on Friday.
Such a move would reverse some of the 1.7 million bpd of OPEC production cuts -- roughly six percent of supplies -- put in place since October 2006. It would also be likely to cool prices that have surged above $76 a barrel towards their record high.
“If there is an increase it is likely to be a small one -- less than a million barrels per day,” an OPEC delegate told Reuters on Sunday. “Otherwise the ministers may make a statement that signals their readiness to increase.”
Of OPEC’s 12 members, 10 are subject to output restraint aimed at capping their production at around 25.8 million bpd.
New members Angola and Iraq stand outside OPEC’s quota system. They brought OPEC’s total output in August to a shade above 30 million bpd into the 85 million bpd global market, according to Reuters data.
Iraqi Oil Minister Hussain al-Shahristani has been the only OPEC minister to suggest publicly that the organization may discuss increasing supplies on Tuesday.
“Oil prices are determined by supply and demand. Currently they are on the higher side. And we will be discussing if we need to increase production slightly to meet increased demand,” Shahristani told reporters in Dubai on Saturday.
Other minister have been more circumspect.
The head of Libya’s delegation, Shokri Ghanem, said it was too early to judge if OPEC would need to raise output this year.
“We are following the market and watching it. If we see that there is a need, we will,” he told reporters.
OPEC President and United Arab Emirates’ Oil Minister Mohammed bin Dhaen al-Hamli insisted current supplies were sufficient. But he added the exporter group was “committed to providing sufficient oil to the world markets.”