VIENNA (Reuters) - OPEC ministers due to arrive here for their meeting on March 17 say there is no need to change output targets with oil prices above their preferred range, but soft demand is prompting calls to curb overproduction.
“In my opinion, I don’t think we are going to see any change, even though inventories are high,” Qatar’s Oil Minister Abdullah al-Attiyah told Reuters by telephone Monday.
“The oil price and fluctuation is one of the many reasons that would lead to a rollover in supply targets.”
Benchmark U.S. crude futures were trading just shy of $80 per barrel Monday, down from Friday’s $81.24 settlement, pressured by a strengthening dollar and expectations China might tighten credit again.
That is at the top end of the $70-80 range that OPEC’s top producer Saudi Arabia has named as a fair price for both producers and consumers of oil.
“Supply and demand are playing little role because the main thing is speculation which results sometimes from political comments and the dollar situation and high inventories,” Libya’s top energy official, Shokri Ghanem, told Reuters in an interview.
Oil price volatility “makes visibility unclear so the organization cannot take any decision to change the output ceiling,” he said.
OPEC last agreed to cut output in December 2008, slashing a record 4.2 million barrels per day (bpd) from production to 24.84 million bpd as the world reeled into recession.
In the past year, rising prices and a hesitant global recovery have encouraged OPEC members to add supply to the market, however.
In February, OPEC delivered just 53 percent of pledged output curbs it agreed in late 2008 -- down from 81 percent a year ago.
High inventories showed there was no shortage of crude in the market, Attiyah said, and OPEC will discuss adherence to existing supply curbs.
“We need very strong compliance,” he said. “If we say rollover, it means with existing targets.”
Ghanem echoed that call, saying members would be called on to comply with the group’s decisions on production.
Forecasts from OPEC as well as the International Energy Agency (IEA) and the U.S. government all suggest demand has been better than expected and could continue to rise this year.
“If you take the average forecast for OPEC demand, you’re looking at 29.2 million bpd, which is in line with production. That’s an indication that things will be the same until the end of the year,” one OPEC delegate said.
OPEC, including Iraq which does not have a quota, pumped 29.28 million bpd in February, a 14-month high, according to a Reuters survey.
“I personally think that because of demand revisions upwards, there a is a need for every drop of oil being supplied,” the delegate said.
OPEC will have to watch the market closely as oil demand grows in Asia, but is still slow elsewhere.
Developed countries have shown little appetite for more oil as their economies emerge from recession, leaving oil producers to fight for market share in developing giant China.
For a graphic showing the relationship between OPEC output cuts and the oil price, please see:
additional reporting by Alex Lawler, Alejandro Barbarosa, Joe Brock in Vienna and Ali Shuaib in Tripoli; editing by William Hardy