AUSTRIA: OPEC ready to keep existing oil output restrictions

Despite being wary of demand following falls in US equity markets, OPEC is still ready to keep output restrictions when it meets on Thursday (March 15). OPEC is ready to keep existing oil output curbs when it meets on Thursday (March 15), delegates said, but the group is wary falls in U.S. equities markets could presage a slowdown in the world's top energy consumer. Stocks dropped again on Wednesday (March 14) as concerns over the impact of U.S. home owners falling behind with mortgage payments hit financial shares. Europe's FTSEuro first fell 2.6 percent and the Dow Jones industrial average was down 0.25 percent. Crude oil seesawed around $58 a barrel, touching its lowest since mid-February at one point. Nigerian Oil Minister Edmund Daukoru, speaking after a meeting of OPEC's advisory panel, said the risks to oil were to the downside amid mounting evidence of slowing economic growth. "I dont think there is a need to increase output later in the year. The demand growth is just a respectable 1.2 but looking at the price levels and looking at the supply situation I dont think there is a need for us to increase production again." Daukoru told reporters as he left the meeting of OPEC's Ministerial Monitoring Committee. "We have to wait a little bit to see, so far we are not very much worried" head of Libya's delegation Shokri Ghanem said. Asked if he thought the economic slowdown in the U.S could spill over into demand for oil Ghanem said: "No, I dont think so. The demand of oil will be better than the IEA is projecting." Delegates will advise OPEC's full ministerial meeting on Thursday to keep current output restrictions in place, despite a call from the International Energy Agency for increased exports. Daukoru was referring to supply curbs totally 1.7 million barrels per day, roughly six percent of supplies, agreed at the group's last two meetings in October and December. Analysts estimate OPEC, that pumps over a third of the world's oil, has made good one million bpd of the pledged reductions. OPEC puts the figure closer to 1.2 million bpd. Iranian Oil Minister Kazem Vaziri-Hamaneh, who also sits on the advisory panel, said OPEC was concerned by market instability that could hurt energy investment. He said the panel would recommend OPEC meet again in June to review the situation. The International Energy Agency and some analysts believe OPEC may have gone too far with its supply curbs. According to the IEA, adviser to 26 industrialised countries, OECD countries could be headed for the largest first quarter drop in oil stocks for over 10 years. Even the most conservative projection, OPEC's own, puts demand for OPEC oil at above 30 million bpd this year. That number includes Iraq and new member Angola, both of which are exempt from output restrictions for the time being. The 10 OPEC members subject to restrictions currently have an output target of 25.8 million bpd. The oil price is well down on its July 2006 peak of $78.40, but is still three times the level at the start of 2002 when Asian demand ignited. OPEC argues prices must be sufficiently high to encourage investment without choking economic growth.

ITN Source | March 15, 2007

Tags:. .agreed. .analysts. .worried. .hurt. .growth