Associated France press 10/9/2006
Falling oil price niggle OPEC ministers
by Adam Plowright
VIENNA (AFP) - OPEC oil ministers gathering in Vienna say they aim to keep the group's production ceiling stable, but concerns about declining prices emerged as they began informal discussions ahead of their meeting on Monday.
The price of a barrel of light sweet crude in New York has dropped over 12 dollars from its record high of 78.40 dollars in mid-July, closing at 66.25 dollars on Friday.
Saudi Arabian Oil Minister Ali al-Nuaimi Sunday dismissed concern about the abrupt fall and described it as a sign that the market was stabilising. But Nigerian Oil Minister Edmund Daukoru, who acts as president of the 11-member body, took a different line.
"I am very concerned about the drop in prices. We do not know how much further they can go, and we need to review that in depth," Daukoru told reporters.
National representatives from the Organisation of Petroleum Exporting Countries, which provides about a third of global oil supplies, have all but confirmed that they will maintain their ceiling at 28.0 million barrels a day in their meeting on Monday.
"Stocks are pretty good, the economy is going well and prices are high, so I imagine we are not going to do anything," said Algerian Energy Minister Chakib Khelil as he arrived on Saturday.
A decision to maintain their ceiling, which has been at a near 25-year high since June 2005, would continue a policy of keeping the market well supplied in a bid to cool turbulent prices.
The quota system excludes production from Iraq but binds the remaining 10 members of OPEC to limits.
Oil has tripled in value since 2002 on surging global demand, driven by China and other emerging countries, as well as fears about interruptions to production in Iran and outages in Nigeria and Iraq.
Nuaimi, who holds the greatest sway in OPEC as the representative of kingpin Saudi Arabia, said that the oil market was well supplied and expressed satisfaction with current market conditions.
"The demand is very well satisfied ... The market is very comfortable and well supplied. We are very happy with the situation," he said.
Iranian Oil Minister Kazem Vaziri-Hamaneh was observed arriving at Nuaimi's hotel for talks on Sunday. Iran has already said it expects the output quota to remain the same.
Venezuelan Energy Minister Rafael Ramirez and Qatari Energy Minister Abdullah bin Hamad al-Attiyah are expected to touch down in Vienna on Sunday.
Daukoru also suggested Saturday that discussions, which begin as soon as ministers arrive and culminate in an official announcement on Monday, were also likely to cover the issue of over-production and the flouting of the OPEC production quota.
"I do not know what we will conclude but we have been producing above quota systematically," Daukoru said.
"We are more or less on auto-pilot, I am afraid we are going to have to think about manual controls," he added.
In July however, the 10-members bound by the OPEC output ceiling produced about 500,000 barrels per day less than the 28.0-million quota, according to figures from OPEC published in August.
Including Iraq, OPEC countries pumped out 29.5 million barrels per day in July.
Analysts had predicted that OPEC would hold its production ceiling steady at their meeting.
Only Saudi Arabia has significant spare capacity to increase production and a cut in supply would spur higher prices. This would be unpopular in consuming nations and would run counter to OPEC's stated aim of stabilising the market.
Libyan oil chief Shukri Ghanem echoed the message that the production ceiling would continue unaltered.
"There is nothing in the market that necessitates change," said Ghanem, who is the Libyan national oil corporation head and represents Libya at OPEC meetings.
"There is much supply in the market and the prices are easing down so I don't think that there is a real need to do much," he told reporters.