OPEC Leaves Oil Production Unchanged

OPEC agreed on Wednesday to keep exports unchanged, rebuffing consumer country calls for more crude to rein in $90-a-barrel oil.

The Organization of the Petroleum Exporting Countries justified the deal on its assessment that it is already pumping enough crude to meet winter fuel demand after a September decision to lift output.

Abu Dhbai
Photo by Altaf Hussein
Abu Dhbai

Wednesday's decision was unanimous, OPEC President Mohammed bin Dhaen al-Hamli told CNBC Europe's Steve Sedgwick.

"There was no proposal whatsoever to put an additional quantity of oil. The worldwide inventory is about 52-and-a-half days, so it's comfortable," bin Dhaen al-Hamli said.

He said the current high prices were caused by bottlenecks at refineries, the falling dollar and the geopolitical situation.

"I hope that … the dollar will regain its strength," bin Dhaen al-Hamli told CNBC.

Enough Stocks

OPEC officials said there were no fundamental causes for rising oil prices.

"There is no reason for the price to go high because we have enough stocks," said cartel Secretary-General Abdullah al-Badri.

"There is no reason whatsoever for prices to go up to $100."

OPEC meets again on Feb. 1 to review policy by which time it may be facing renewed calls to help stifle inflated energy costs as its biggest importer, the United States, struggles to maintain economic growth.

U.S. crude rose $1 to $89.40 a barrel and analysts said prices could make further gains back toward November's record highs above $99.

"The postponement of a decision only means that the supply gap between global oil demand growth and non-OPEC supply growth will be met by a draw in inventories," said Harry Tchilinguirian at BNP Paribas. "That remains bullish for prices."

"They will be giving another opportunity to speculators to push the market up closer to the $100 level in the short term," said consultant John Hall of John Hall Associates.

Growth Worries

Some in OPEC share consumer country concerns about the impact of high energy costs on economic growth as the U.S. slowdown threatens to spill over into the global economy.

But ministers argued that they cannot control prices because speculators have divorced prices from market fundamentals.

Producers also point to a decline in the value of the U.S. dollar which makes a dollar-denominated oil price rise less painful in non-dollar economies and devalues OPEC's purchasing power.

"Because the dollar has weakened so much over the past few months I think OPEC's price aspirations have probably shifted higher," said Helen Henton, head of commodity research at Standard Chartered Bank.

OPEC also set output targets for its new members Angola and Ecuador at 1.9 million barrels a day and 520,000 bpd respectively.

That puts output for 12 members with official quotas at 29.67 million bpd, excluding Iraq, the only member not bound by a quota.