OPEC expected to keep production unchanged
The Organization of the Petroleum Exporting Countries, supplier of 40% of the world's oil, will probably keep producing at a near-record pace as $106-a-barrel crude squeezes the global economy.
"Our position is to leave everything unchanged," Ecuador Energy and Mines Minister Galo Chiriboga told reporters as he arrived at his hotel in Vienna on Sunday. "We believe the market is well-supplied."
The 13-nation OPEC will keep production unchanged at a meeting today in Vienna, according to 29 of 32 energy analysts surveyed by Bloomberg last week. Iran and Venezuela will urge the group to trim supplies to prevent oil prices from retreating below $100 a barrel.
"They want to prevent a buildup of crude stocks, which rules out an increase, but don't want to send prices skyrocketing by announcing a cut," said Mike Wittner, head of oil research at Societe Generale in London. "OPEC won't take any formal action."
Oil has plunged $41 a barrel, or 28%, from its record $147.27 on July 11 as economies slowed, the dollar halted a three-year slide against the euro and Hurricane Gustav caused almost no damage to U.S. drilling platforms and refineries. Demand for crude will increase 1% in 2009, the slowest growth in seven years, according to an Aug. 15 forecast by OPEC.
All the countries except Saudi Arabia are pumping at close to capacity to meet rising demand and compensate for declining supplies from Nigeria and Venezuela.
Although leaving quotas unchanged, the group may curtail production to prevent inventories from swelling, said Adam Sieminski, Deutsche Bank's chief energy economist in Washington.
"If prices are rising, they will leave production alone, and if they are falling, they will trim a little," he said.
Record oil prices spurred European inflation to 4% in July and contributed to the first quarterly contraction in the region's economy since the euro was introduced almost a decade ago.
In the U.S., gasoline demand fell for 19 consecutive weeks, according to MasterCard Inc., with the average fuel price now near $3.70 a gallon.
The world economy is "precariously close" to a recession in 2009, UBS said last month as it cut next year's global growth forecast to 2.9%. It considers a 2.5% rate consistent with a recession.
Oil for October delivery fell for a sixth consecutive session Friday, dropping $1.66 to $106.23 a barrel on the New York Mercantile Exchange, the lowest settlement price for a contract closest to expiration since April 4.
