When the Organization of the Petroleum Exporting Countries (OPEC) talks, everyone listens, and what OPEC is saying now bodes well for energy consumers the world over, reports Florian Neuhof of The National.
OPEC predicts an improving supply and demand picture for the rest of the year in a report released one day after its most prominent member suggested further raising the organization’s voluntary production ceiling.
Recession or poor growth in the major economies of Europe, North America, and Asia, and high output by OPEC and non-OPEC producers, have driven down oil prices after they increased at the beginning of the year. That trend may continue.
"The second half of the year could see a further easing in fundamentals, despite seasonally higher demand," OPEC said in its latest monthly report.
On the eve of the group’s biannual meeting in Vienna, the report also forecast lower demand. "In 2012, demand for OPEC crude is projected to average 29.9 million bpd [million barrels per day], representing a decline of 0.1 million bpd from last year’s level," it said.
OPEC pumped oil at a rate of 31.56 million bpd last month, according to the report, a minor reduction on the previous month, and the first decline in eight months. Demand for its crude is forecast to fall to 30.92 million bpd in the third quarter, and to 30.55 million in the fourth quarter.
In spite of falling demand, Ali Al Naimi, Saudi Arabia’s oil minister, on Monday said the OPEC production ceiling should "maybe" be raised. The voluntary quota was set at 30million bpd, far below current pumping levels.
"The comments are surprising and suggest Saudi Arabia isn’t willing to reduce production," said Carsten Fritsch, an analyst at Commerzbank.
Saudi Arabia had led the way in raising its output, intent on bringing prices down to support a flagging world economy. As a consequence, Brent prices have dropped from $125 a barrel earlier this year to about $97.
Al Naimi qualified his remarks yesterday by saying that he would not call for a rise in OPEC production at the group’s upcoming meeting. "I am happy the way things are," he said.
His earlier suggestion had been meet with strong opposition by OPEC hawks, such as Iran and Venezuela, which want a return to higher prices.
Read more from The National here…
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