OPEC said Thursday it would hold its current oil production target steady but meet again in February to consider cutting output to match an expected decline in springtime demand.
The organization of Petroleum Exporting Countries, which supplies about a third of the world’s oil, will keep its daily production ceiling at 25.4 million barrels of crude, spokesman Omar Ibrahim told a news conference.
However, OPEC’s 11 members decided to meet again on Feb. 10 to reassess the possible need for a future cut, out of concern that prices might plunge during the second quarter of 2004, when demand typically ebbs to an annual low.
“We believe we will decide then how (much) to cut,” OPEC President Abdullah bin Hamad Al-Attiyah said.
But oil prices fell in the wake of the announcement.
Increasing oil exports from Iraq, together with rising output from Russia and other non-OPEC producers, have added to OPEC’s anxiety.
OPEC’s representatives reached their decision after more than three hours of private talks at the group’s headquarters in Vienna.
Despite market fears that OPEC, led by Saudi Arabia, might seek permanently higher prices for crude, the group made no change in its desired price range of $22 to $28 per barrel.
OPEC members have been producing well above their quotas to take advantage of the higher prices that followed the group’s surprise decision in September to trim output by 3.5 percent, or 900,000 barrels a day. Prices firmed up after that earlier decision and hovered last month at or above $28 a barrel — the top end of OPEC’s targeted range. OPEC’s benchmark price stood at $28.68 on Wednesday, the most recent day for which the group compiled data.
In futures trading Thursday on London’s International Petroleum Exchange, North Sea Brent crude for January delivery were down 69 cents to $28.45 a barrel. January contracts of light sweet U.S. crude were down 43 cents at $30.67 on the New York Mercantile Exchange.
Saudi Arabian Oil Minister Ali Naimi triggered speculation that the group might seek a higher target price when he argued Wednesday that current crude prices were “right.” He indicated that the recent depreciation of the U.S. dollar against other currencies might warrant a new target price for oil, which is denominated in dollars. Because the dollar’s purchasing power has weakened, a price higher than $28 was now acceptable, he said.
However, he appeared later to back off from this apparent blessing for consistently higher oil prices.
Some oil analysts say OPEC, which pumps about a third of the world’s oil, will need to cut as much as 2 million barrels from its production in the second quarter if it hopes to match supply with anticipated demand.