The oil market is sufficiently supplied with crude despite high prices, top officials from oil producing and consuming nations said this week, reducing the likelihood that OPEC will make any change in output levels when it meets this month. The International Energy Agency (IEA), an organisation of energy consuming states based in Paris, endorsed the status quo on Tuesday, saying the market is "very well supplied".
"All other conditions being equal - the current demand and supply situation is very well balanced," Nobuo Tanaka, the executive director of the IEA, said in Washington DC. "The stock level is a very comfortable one." The IEA, representing the interests of oil importers, often calls for OPEC to increase supply to reduce the oil price burden on IEA member states. Mr Tanaka's comments bolster the argument of a number of OPEC member states that the group should leave production limits unchanged at its next meeting in Angola, on December 22.
Sheikh Ahmad Al Sabah, the Kuwaiti oil minister, said yesterday that a consensus was emerging in OPEC that output would remain unchanged. Energy producers are eyeing sharp growth in the amount of oil in storage, which could threaten crude's 125 per cent rally this year from lows below US$34 per barrel in February to $77.50 yesterday. Sheikh Ahmad said he was "of course" concerned by the increase in inventories.
The persistent price rise in the face of the supply glut has quietened calls for OPEC to begin rolling back the limits it imposed in December last year, when prices hit their nadir. Abdullah al Attiyah, the Qatari energy minister and deputy premier, said on Tuesday there should be no change in output limits because "the market situation is still volatile and growth is still fragile". Mr al Attiyah's comments echoed similar remarks from officials in Iran and Libya.
Even without a formal change in limits, OPEC's output has been inching up steadily in the second half of this year. A survey of analysts by Dow Jones found that OPEC production increased 0.42 per cent last month, led by more output from Nigeria and Saudi Arabia. The 11 members of OPEC bound by production quotas pumped 1.8 million barrels per day (bpd) above their group target of 24.84 million bpd, the survey found.
Prices for West Texas Intermediate (WTI) crude fell below $77 a barrel on Wednesday after a weekly report from the US government showed that crude oil stocks grew faster than expected. Inventories in the US were at a two-month high at a time when holiday demand for transport fuels soaks up the extra oil in storage, said JBC, an energy consultancy based in Vienna. "The latest - inventory figures were a howler for bulls, with a counter-seasonal 2.1 million barrel rise in crude oil stocks," JBC said yesterday. "Bear paw prints were also all over the reported 4 million barrel rise in [petrol] inventories, which came despite refiners clipping crude throughput back below 80 per cent of refining capacity."
WTI prices recovered yesterday, rising 90 cents to $77.50 a barrel at midday. Prices for Oman sour crude for delivery in February, traded on the Dubai Mercantile Exchange, rose 43 cents to $79.03 a barrel. @Email:firstname.lastname@example.org * with agencies