Opec not to tweak quotas on weak demand

The Organization of Petroleum Exporting Countries (Opec) members had a consensus to keep oil production quotas unchanged as demand remained weak in developed economies, officials from Saudi Arabia and other Opec nations said.

Opec had kept production quotas unchanged at its three previous meetings this year, having agreed to cut output in late 2008 in response to falling prices. Ministers began closed-door talks today in Luanda, Angola at about 10:30 am local time.

“Quotas will continue as they are right now,” Saudi Arabian Oil Minister Ali al-Naimi told reporters today, before the meeting began. “There is no need to change,” he said.

Oil has gained 66 per cent since the beginning of the year, when earlier cutbacks agreed in late 2008 took effect. The group slashed supply this year in response to a global recession that sapped consumption, and some developing nations are yet to show signs of a recovery in demand. Oil futures traded near $74 a barrel today in New York.

Al-Naimi said prices between $70 and $80 are “perfect,” adding that Saudi Arabia, the largest producer in the 12-member group, will produce and ship about the same amount of oil in January as it does this month.

The International Energy Agency on December 11 raised its forecast for oil demand next year, highlighting growth in Asia and West Asia, rather than developed nations in the Organization for Economic Cooperation and Development (OECD). “A key risk to the forecast pertains to the US outlook,” the Paris- based agency said in its monthly report.

China demand
“We are seeing demand from China, the West Aisa and Latin America,” al-Naimi said today. “I don’t think demand for fossil fuels will go up in OECD countries.”

A presentation by the Opec Secretariat, shown today to Opec ministers and journalists, said the economic crisis had resulted in some permanent loss in OECD oil demand.

Current quotas allow for combined production of 24.845 million barrels a day from 11 Opec members. Iraq is exempt from output targets. Those 11 pumped 1.66 million barrels a day more than the collective ceiling in November, according to Bloomberg estimates, meaning those countries have completed 60.6 per cent of their pledged 4.2 million barrel-a-day cut.

Opec Secretary General Abdalla el-Badri said he wants to see quota compliance at between 75 per cent and 80 per cent, versus the current level of about 60 per cent. Algeria’s oil minister Chakib Khelil also said today there is consensus to keep quotas at previously agreed levels.