OPEC agrees no change
 |
Saudi Oil Minister Ali al-Naimi says high prices reflect the dollar's weakness.
Story Tools
YOUR E-MAIL ALERTS
|
Follow the news that matters to you. Create your own alert to be notified on topics you're interested in.
Or, visit Popular Alerts for suggestions.
|
|
VIENNA, Austria (Reuters) -- OPEC oil producers agreed on Thursday to keep oil supplies on hold for the winter and move aggressively to shore up high world crude prices early next year.
The Organisation of the Petroleum Exporting Countries kept output limits unchanged at 24.5 million barrels a day and will meet again on February 10 in Algiers, UAE Oil Minister Obaid bin Saif al-Nasseri said.
Ministers also scheduled talks for March 31 in Vienna and June 3 in Beirut to leave markets in no doubt about their intention to micro-manage prices.
"The message from OPEC is that it is still managing the oil market very well,'' said Oystein Berentsen, head of international crude trading at Norway's Statoil.
The group that controls half the world's crude trade says it expects to cut deliveries in February. Producers already appear to have a consensus on the need for tougher restraints then as demand eases after the northern winter and to make room for the recovery in post-war Iraqi exports.
Kuwaiti Oil Minister Sheikh Ahmad al-Fahd al-Sabah said that at least one million barrels daily, four percent of group supply, would need to be removed.
Thursday's deal saw oil prices reverse some of this week's sharp gains as traders expressed relief that OPEC had not opted for immediate curbs from January.
U.S. light crude eased by 55 cents to $30.55 a barrel.
"Any downside move on price is likely to be limited. They can manage to support $30 U.S. crude if they want to,'' said Statoil's Berentsen.
Dollar justifies high price
Leading OPEC power Saudi Arabia says it is pursuing a higher oil price target to offset purchasing power lost to the decline of the U.S. dollar against other major currencies.
Saudi Arabia's Oil Minister Ali al-Naimi said the dollar's slump justified current prices.
"Saudi Arabia is worried that next year it will get the double whammy of a lower market share, because it will have to shoulder most of the cuts, and the low dollar will mean higher import costs,'' said independent energy consultant Mehdi Varzi.
International oil sales are dollar-denominated so the feeble dollar has slashed OPEC's purchasing power for goods and services from countries like Japan and the euro zone.
Other OPEC ministers have fallen in line with the effective raising of the dollar price target to $28 for an index of cartel crudes, after nearly four years aiming for $25.
But there is no move yet for a change to the group's formal $22-$28 target band.
A key U.S. ally, Riyadh has traditionally sought a careful balance between maximising oil revenues and ensuring demand remains strong among Western customers.
But for the United States rising crude prices could mean extra heating oil and gasoline costs ahead of President George W. Bush's bid for re-election.
"Effectively now they are targeting a $25-$30 basket, that's $27-$32 for U.S. crude, and that is not a soothing message for Washington going into an election year,'' said Varzi.
Copyright 2003
Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
