The market is “balanced,” Suhail Mohammed Al-Mazrouei, energy minister for the United Arab Emirates, said via Twitter on his way to Vienna, where ministers will meet to decide whether to alter the group’s 30 million-barrel-a-day target.
Predictions among ministers and traders that the group will elect to maintain its official ceiling come amid warnings from some analysts that excess supply, including US shale oil and a potential resurgence in exports from Iran and Libya, may push prices lower in 2014 if cuts aren’t made.
“The market is in the best condition it can be,” Naimi said as he arrived at his hotel Monday in Vienna. “Everybody is going to supply what they can to satisfy demand.” The Saudi minister didn’t offer an opinion as to what OPEC would decide about its output target.
Brent crude, the benchmark used to price more than half of the world’s crude, was 32 cents lower at USD 111.13 a barrel as of 1:28 pm in London on the ICE Futures Europe exchange. It averaged USD 108.55 since the start of the year, compared with USD 111.68 in 2012 and USD 110.85 in 2011.
Rising output from outside the Organization of Petroleum Exporting Countries will trim the amount of crude required from the group’s 12 members next year to 29.6 million barrels a day from 29.9 million in 2013, according to a November 12 forecast from the group’s secretariat. OPEC pumped 30.007 million barrels a day in November, based on Bloomberg estimates, exceeding the official target amid output disruptions in member states Iraq, Libya and Iran.
Iraqi Oil Minister Abdul Kareem Al-Luaibi and his Algerian and Angolan counterparts, Youcef Yousfi and José Maria Botelho de Vasconcelos, all said Tuesday that OPEC will leave its current ceiling alone. Mustafa Al-Shamali, Kuwait’s oil minister, echoed the same view, saying prices are “good.” The 12-nation group supplies about 40 percent of the world’s oil.
OPEC doesn’t need to cut output to keep prices “buoyant at current levels,” Gordon Kwan, a Hong Kong-based analyst at Nomura Holdings Inc., said in an e-mail today.
“OPEC is likely to maintain its production ceiling during its meeting on Wednesday in Vienna,” Yousfi said Tuesday, according to the Algerian state-run Press Service.
Iraq plans to increase exports to an average 3.4 million barrels a day next year, Luaibi told reporters Tuesday in Vienna. The country will produce an additional 700,000 barrels a day of crude for domestic use.
Demand for crude from OPEC is estimated to remain near current levels in 2014, so ministers will probably stick with the current output ceiling, said three delegates yesterday who spoke on condition of anonymity because discussions are private.
The delegates spoke to Bloomberg before Naimi arrived. A Bloomberg survey last week showed 22 out of 24 analysts and traders expect OPEC to keep its target unchanged.
Naimi said the return of supply from Iran and Iraq wouldn’t necessarily prompt a subsequent OPEC output cut. Saudi Arabia pumps almost a third of OPEC’s oil.
“Why cut production?” he said in response to a question. “Demand is there.”
The Centre for Global Energy Studies in London and Citigroup Inc. in New York have forecast that the kingdom and its allies Kuwait, Qatar and the United Arab Emirates would have to reduce production by 1 million to 2 million barrels a day in 2014 to prevent a glut and keep prices stable.
The US is pumping the most in almost a quarter century amid surging production from shale formations. It will surpass Russia and Saudi Arabia to become the world’s largest oil producer for a few years from about 2015, the International Energy Agency said last month.
“The market is doing well for the past two years, price is doing well, supply and demand in equilibrium, inventories are in the right position,” Naimi said.