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OPEC left output at 25.8m barrels per day

16 March 2007 12:32 (UTC +04:00)

The oil ministers of the Organization of Petrolem Exporting Countries (OPEC), meeting here at their 144th regular session, reached the agreement to maintain the present production quota at 25.8 million barrels per day after intensive consultations that preceded the closed-door regular meeting.
By agreeing to roll over its current official output of 25.8 million barrels a day, the OPEC has clearly indicated its emphasis on enforcing the previously announced output cuts, instead of making new vows. The oil organization voted for stability and continuity rather than turbulence that any pronouncement to the contrary would have generated in the global crude markets in the given circumstances.
OPEC members have generally expressed satisfaction with their oil fetching about $60 a barrel in recent weeks, and their decision to stick with the status quo reflected their desire to keep prices around that level.
"The market is stable, the market is healthy. We donâ€™t need to touch it now,â€? said OPEC Secretary General Abdalla Salem Badri.
The OPEC decision to roll over their current crude output for the quarter was thus very much in line with the expectations of the market - springing no major surprises.
An OPEC advisory panel had earlier also recommended to the ministers that the organization needed to focus on greater compliance with the current quotas. According to some market estimations OPEC was overproducing by about 700,000 barrels per day (bpd). With this in mind, OPEC has still "got room left to cut back within existing quotas" before considering any fresh reductions, some have been underlining.
At its last two meetings in October and December last year, OPEC agreed to cut output by a total of 1.7 million bpd, although most outside estimates indicate organization members have only cut by around 1 million bpd to date.
Since OPECâ€™s cuts, inventories in consumer hands have been falling fast. Last month, the IEA reported that commercial stockpiles in its 26 member countries in North America, Europe and Asia fell by 93 million barrels in the fourth quarter, to 2.674 billion barrels at the end of December.
The data from the US Energy Department last week showed that inventories in the US alone had fallen by more than 100 million barrels since the start of October.
After the decision by the Organization of the Petroleum Exporting Countries, light, sweet crude for April delivery slipped 9 cents to $58.07 a barrel on the New York Mercantile Exchange.
The oil cartel members will next meet in September and December to review the production. /APA-Economics/