OPEC Sends Conflicting Signals on Cut
OPEC ministers sent conflicting signals on Saturday on whether the group needed to reduce oil production further to bring markets back into equilibrium.
Most ministers in OPEC, which pumps more than a third of the world's oil, are concerned about swelling fuel inventories but others seem to feel the group would be hard-pressed to justify fresh supply curbs with oil prices firmly above $60 a barrel.
Libya's top energy official said markets seemed to be nearing a balance and he did not feel there was a need for OPEC to add to the 1.2 million barrel per day cuts agreed in October.
"For me, it doesn't look at this moment that a cut is necessary, but we have to see," Shokri Ghanem told reporters.
But influential Saudi Oil Minister Ali al-Naimi reiterated that the market was out of balance because of high stockpiles and that 100 million barrels should be removed.
Naimi, speaking in Cairo ahead of a meeting of Arab exporters, did not say if a deeper OPEC cut was needed to remove any overhang or if the group should carry on with existing cuts.
He previously said the Organization of the Petroleum Exporting Countries will need to tighten supply when it meets on December 14 in Nigeria if existing curbs did not remove the slack.
Qatari Energy Minister Abdullah bin Hamad al-Attiyah agreed with the Saudi assessment that inventories were "very high," but also did not say whether deeper cuts were needed in December.
Since OPEC agreed on its cut, U.S. crude stockpiles have risen by about five million barrels to 340 million, U.S. data shows.
OPEC President Edmund Daukoru said on Friday the group would probably trim again, but the size of the reduction would depend on prices and inventory levels. Venezuela's oil minister has said Caracas could propose a further cut of 500,000 bpd.
Iran's oil minister was quoted by student news agency ISNA on Saturday as saying OPEC may cut output again if oil prices fell. "There is such a possibility if the prices fall," Kazem Vaziri-Hamaneh said. "This cannot be predicted right now."
Since hitting a 17-month low of $54.86 on November 17, U.S. crude prices have risen around $8 to above $63 on Friday.
Kuwait's oil minister has said OPEC should not make additional output cuts with U.S. crude above $60 a barrel.
And Libya's Ghanem said he did not believe the excess in stocks would have a big impact on oil markets "within the framework of current prices," which he said were acceptable.
The prospect of another supply cut by OPEC raised alarm in the world's leading consumer the United States on Friday.
Energy Secretary Sam Bodman advised against a cut and the Energy Information Administration said OPEC would not have complete data about U.S. inventories by its December meeting, making any further decisions on cuts risky.
The United Arab Emirates' oil minister said OPEC needed to assess the impact of its last cuts before deciding on a course of action. Naimi had said he believes compliance with existing curbs is good.
A Reuters survey showed the 10 OPEC members with output curbs had enforced two thirds of the pledged cuts in November. Led by Saudi Arabia, they cut output by 785,000 bpd, but were still pumping nearly 600,000 bpd over a 26.3 million bpd target.