ABUJA (Reuters) -OPEC was considering on Thursday delaying an oil output cut until the northern winter has passed, responding to the calls of importer nations’ afraid supply curbs now will drive prices higher and hurt their economies.
The group that pumps over a third of the world’s oil has already reduced production once this year — by 1.2 million barrels per day, or four percent, in October to halt a 10-week, 25 percent slump in the oil price.
As recently as last week there was little doubt a further cut of at least 500,000 barrels per day would follow from Jan 1.
But with oil above $60 and consumer nations on edge the mood appears to have shifted in some delegations toward delaying a cut until peak winter demand subsides.
U.S. oil stood at $61.71 on Thursday.
“We are satisfied with the decision we took in Doha,” Kuwaiti Oil Minister Sheikh Ali al-Jarrah al-Sabah told reporters, referring to OPEC’s emergency gathering in October that set a new output target of 26.3 million bpd.
OPEC ministers agree the market is still oversupplied — stocks in top consumer the United States are the highest since 1998 for the time of year — but some say now, during peak winter demand, is the wrong time to cut.
They also note consumer stocks are in decline. Inventories in the OECD group of industrialized countries fell 40 million barrels in October, the International Energy Agency said on Wednesday, and the trend continued in November.
OPEC will consider several options, delegates said.
They may decide simply to ensure full adherence to October’s deal and meet again in January, or they could decide to cut around 300,000 barrels per day from January 1 or February 1, as the northern hemisphere begins to emerge from winter.
That is a drop in the ocean to the 85 million barrels per day oil market.
The opinion of leading exporter Saudi Arabia is key.
Oil Minister Ali Al-Naimi has said the market is in better shape now than when ministers last met. He estimated OPEC had succeeded in removing half the excess 100,000 million barrels.
“The fundamentals of the market are much better than they were in October,” he said, adding: “We probably have a little work to do to make it an even better, more stable market.”
U.S. Energy Secretary Sam Bodman and International Energy Agency head Claude Mandil have called on OPEC to wait before making further supply reductions.
Some ministers agree there is a case for holding fire.
OPEC research director Hasan Qabazard has said if members abide by the deal they struck in October, that should restore equilibrium. OPEC has delivered almost two thirds of the 1.2 million bpd reduction so far, according to Reuters estimates.
The IEA, adviser to 26 industrialized countries, said in its monthly report on Wednesday OPEC cuts from November 1 were making themselves felt, “cold comfort for a risk-prone global economy already facing another winter with high oil prices.”
Oil has fallen from a mid-July peak of $78.40 but is still three times the price at the start of 2002 as Asian demand kicked in. Refining constraints and worries over supply from Iraq, Nigeria, Iran and Russia helped fuel the rally.
Venezuela, with a costly social spending program under President Hugo Chavez, is among those pressing for a cut.
“I would imagine it will be hard for OPEC to do anything,” said independent oil analyst Geoff Pyne. “Although it’s true oil stocks are high in absolute terms, they certainly seem to be being drawn down quickly. I think when the ministers look at the IEA report it is very hard to make further cuts.”
The OPEC meeting started at 0900 GMT with ministers going into closed session at 1000 GMT. It is during this session that they are expected to strike a deal.