VIENNA // With the world still oversupplied with oil, Opec has opted to leave its output unchanged for the time being. The oil exporters' group, which has held its production targets steady since announcing deep cuts late last year, said it would reassess the market situation at its December 22 meeting in Luanda, Angola. "Whilst there are signs that economic recovery is under way, there remains great concern about the magnitude and pace of this recovery," Opec said in a statement issued after last night's meeting in Vienna.
"There has been some easing of the overhang in crude oil stocks but market fundamentals remain weak, refinery utilisation rates are low and product inventories have risen considerably," it noted. The group also pledged to maintain "an adequate level of spare capacity for the benefit of the world at large". Abdulla el Badri, the Opec secretary general, said the group was not seeking a particular price band for crude and is wary of the potential for higher oil prices to prolong an economic crisis he compared to the Great Depression of the 1930s.
"We don't want to take action that will jeopardise the recovery," Mr el Badri said. Nonetheless, any price below US$75 per barrel would not encourage Opec members to invest in new supplies, while an $80 crude price would not hurt the market, he added. Opec members' compliance with the record 4.2 million barrels per day (bpd) of output cuts pledged last year had slipped to 68 per cent to 70 per cent, from about 80 per cent in March, Mr el Badri said.
He suggested better compliance and in increase in global oil demand would be needed to shrink the brimming oil stockpiles that continue to overhang the market. After falling by 1.6 million bpd this year, a "modest" recovery in oil demand of 500,000 bpd was expected next year, Mr el Badri predicted. tcarlisle@thenational.ae