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French Version

OPEC considering partial reversal of December's output cut

But cartel chief insists there is no shortage of crude in U.S.
Saudi oil minister says organization can afford to wait until March meeting before it reduces production

OPEC President Sheikh Ahmed Fahad al-Ahmed al-Sabah said Thursday that the cartel would consider returning some of the oil it removed from the market in December, if warranted.

In an interview with CNBC Europe, Sabah said that the one-million-barrel-per-day cut in the group's ceiling could be restored. "If the market needs it, of course we'll put it back into the market."

But he tempered his remarks, telling CNBC that there was no shortage of crude in the United States.

However, Saudi Arabia's Oil Minister Ali al-Naimi said in an interview in Davos that OPEC does not need to cut production at the cartel's Sunday meeting and can afford to wait at least until March before reducing supply.

"One needs to wait until we get closer to the second quarter, possibly in the March meeting, possibly after, it just depends," he told Reuters in an interview on the sidelines of the World Economic Forum in Davos.

OPEC meets Sunday in Vienna to discuss its output policy against a backdrop of U.S. benchmark crude prices that have climbed near $50 a barrel. Prior to the recent uptick in prices, OPEC was expected to implement a further cut in its official output ceiling.

Now, Sabah and others have said a cut is unlikely.

The OPEC chief also sought to assuage oil consumer concerns that there is only a thin margin of spare crude capacity among the Organization of Petroleum Exporting Countries to offset any major oil production shutdown.

"We will have 2.5 million to three million bpd spare capacity in 2005," he said.

On Wednesday, Kuwait Petroleum Corp. chief executive Hani Hussein said high oil prices and supply shortages could keep production at current levels.

"The oil price is high at the moment," he said. "It's because of a cold winter in the U.S. and supply shortages that are likely to continue."

Naimi reiterated Thursday that his country has spare oil-production capacity of 1.5 million to two million bpd.

"We have been producing nine million bpd since our (OPEC) decision in December," Naimi said on the sidelines of the World Economic Forum Energy Governors Meeting.

Fearing its record output - the highest in 25 years - had overtaken demand, OPEC lowered its production by a million bpd on Dec. 10.

Crude futures rose Thursday, but stayed below the $50 mark following bearish U.S. petroleum inventory data and forecasts for warmer weather in America.

Light, sweet crude for March delivery rose $0.72 to $49.50 a barrel on the New York Mercantile Exchange.

February heating oil was up $0.0147 at $1.4180 a gallon. Brent for March delivery rose $0.41 cents to $46.92 a barrel on the International Petroleum Exchange in London.

Data released by the U.S. Energy Information Administration on Wednesday showed crude stocks rising 3.4 million barrels to 295.6 million barrels for the week ending Jan. 21. Crude stocks are now about 9 percent, or 25 million barrels, higher than last year.

Sabah also said that it was likely the cartel's third-quarter meeting would be held in Kuwait, where he is the oil minister.

Beirut,01 31 2005
The Daily Star
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