Industry and Energy

Industry and Energy

OPEC may raise oil output

22 October 2009 16:57 (UTC +04:00)

Baku -APA-Economics. OPEC could decide to boost crude oil output in December if prices continue to strengthen and a global economic recovery is sustained, cartel secretary-general Abdalla Salem El-Badri said here Thursday.
OPEC "will not hesitate to increase its production in December," he told reporters, adding that the decision was dependent on higher oil prices, improving economic growth and no floating storage of crude.
The 12-nation Organization of Petroleum Exporting Countries (OPEC), whose members pump 40 percent of the world’s crude oil, will hold its next meeting in Luanda, Angola on December 22.
El-Badri was speaking a day after New York oil prices surged to a one-year high of 82 dollars per barrel on the back of the weak dollar and falling US energy inventories.
"If these prices will continue, if we see the stocks go back to the normal level... if we see there is a real world economy growth, then I am sure our member countries will take the decision to increase the production in December in Luanda," he told a press briefing in London on Thursday.
He added that an increase in output would also be conditional on "signs of economic growth improving and no floating storage" of crude oil.
Earlier this week, El-Badri argued that 60-70 dollars per barrel would not be enough to fund adequate investment levels by OPEC.
The OPEC chief was in London this week to attend Oil & Money 2009, a London conference for the world’s energy industry. The two-day event drew to a close on Wednesday.
At its last meeting in September OPEC agreed to maintain output quotas at existing levels. The organisation’s official daily output level has stood at 24.84 million barrels a day since January.
Oil prices tumbled from historic highs of more than 147 dollars in July 2008 to about 32 dollars in December in response to the global recession but have since clawed back ground on economic recovery hopes.
The recent price spurt has been fuelled by a weak US currency, which makes dollar-priced crude cheaper for holders of stronger foreign units.
But there are doubts on whether oil prices can be sustained at levels above 80 dollars given the still fragile state of the global economy.
"We remain cautious about the sustainability of the oil price in the near term," analysts from the Commonwealth Bank of Australia said in a report.
The International Energy Agency, representing the interests of oil consuming nations, has also spoken of uncertainty on the oil market.
The agency said in a report earlier this month that while demand for oil should grow at the end of this year and in 2010 as the global economy strengthens there is a wide range of risk in how the market will actually behave, suggesting that prices are unlikely to significantly.
The IEA foresees an oil price of about 75 dollars a barrel next year.
Despite a turnaround from depressed levels, oil demand in 2010, even after an expected "rebound," will "still remain below 2008 levels," the report said.
The IEA now expects global oil demand to average 84.6 million barrels per day this year, meaning annual contraction of 1.7 million barrels per day, equivalent to a fall of 1.9 percent from consumption last year.
Demand was expected to rise to 86.1 million barrels per day in 2010, an annual increase of 1.4 mbpd, marking a turnaround to an annual increase of 1.7 percent.
El-Badri also noted that climate change and the Copenhagen meeting in December to discuss means to combat it "were very important to the whole world."
Developing countries, he said, wanted sustainable economic development and to ensure a ’win-win’ outcome for all, "everybody must feel he’s getting something" from an agreement.
Technology transfer, in return for a broad accord, to help developing countries control their growing greenhouse gas emissions was crucial, he added. Source: AFP