VIENNA: The Opec oil group opted on Thursday to keep its output unchanged,
with signs of economic recovery and higher crude prices persuading members to
maintain their current production levels.
The 12-member group believes the market is oversupplied, as shown by current
high stock levels, but the exporters are satisfied with prices after a recent
rally that has taken crude back above $60 a barrel.
Our decision was to remain with the same level because we see things improving
in the future,’ said Algerian Energy Minister Chakib Khelil, adding the group’s
production target would remain at 24.845 million barrels a day.
The group could have cut production to remove some of the excess oil in the
world system. Demand is so weak that millions of barrels of crude are being kept
at sea in tankers that have become floating storage facilities.
Instead, the group has bet that increasing demand will mop up some of this glut.
Saudi Arabia’s Oil Minister Ali al-Nuaimi spoke on Wednesday of signs of a pick
up in orders in Asia and the United States.’The market is oversupplied, it’s
true, but ... we are seeing a light at the end of the tunnel. There is slowly,
slowly a small recovery,’ said Opec secretary general Abdalla Salem El-Badri
after a regular meeting in Vienna.
The Organisation of Petroleum Exporting Countries, which pumps 40 per cent of
world oil, cut its production target three times late last year to stabilise
prices that tumbled from record highs above $147 in July to $32.40 in December.
Oil soars
Meanwhile, oil prices soared above $64 on Thursday, hitting the highest since
early November on the back of a weak dollar, upbeat US economic data and Opec’s
decision to hold output unchanged.
New York’s main futures contract, light sweet crude for delivery in July, jumped
as high as $64.19 per barrel, a level last seen on November 10.
London’s Brent North Sea crude for July hit $63.38, a price last witnessed on
November 5.
In midday trade earlier, New York was quoted up 10 cents to $63.55, with Brent
also up 10 cents to $62.60.
The price gains came as the US currency dropped sharply against the euro. |
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