OPEC to ensure market remains well supplied: UAE minister

September 8th, 2008 - 9:43 pm ICT by IANS  

Abu Dhabi, Sep 8 (IANS) The fundamental policy of the oil cartel Organisation of Petroleum Exporting Countries (OPEC) that the market remains well supplied has not changed and will not change when OPEC ministers meet in Vienna Tuesday, according to a senior minister of the United Arab Emirates (UAE).”However, it is fair to point out that the determining factor behind any decision on production levels is whether or not the market is well supplied,” Minister for Energy Mohammed Bin Dhaen Al-Hamli told the state-run Emirates News Agency (WAM) on the eve of the 149th meeting of the OPEC Conference in the Austrian capital.

“Commercial crude oil stock levels in the OECD (Organisation of Economic Cooperation and Development) countries are within the five-year average level, which indicates that the market is well-supplied,” Al-Hamli, who will lead the UAE delegation at the Vienna meeting, said.

The UAE is the world’s fifth-largest oil exporter.

According to trade estimates, this Gulf nation produced around 2.5 million barrels per day (bpd) in 2007.

Al-Hamli said the Vienna meeting would discuss production targets and production levels in the next few months and it was not possible to predict the outcome of the meeting.

Asked about future of oil prices, he said: “It is virtually impossible to predict oil prices because they are set by international oil markets with little or no influence from producing countries.”

Markets, the minister explained, continue to be driven by the same factors - financial speculation, geopolitical concerns and adverse weather events as well as fundamental demand and supply factors.

Oil prices nearly doubled from around $70 a barrel in August 2007 to over $140 per barrel in June this year, but it has now fallen to below $110 a barrel.

Commenting on speculations from various quarters that OPEC production in the first quarter of 2009 could be as much as 1.5 million bpd, - well above the call on OPEC crude - Al-Hamli said: “Our policy is to constantly monitor supply and demand trends and to respond accordingly. The call on OPEC crude in 2009 will depend largely on emerging macroeconomic trends and we are closely following worldwide economic growth indicators.”

He also rejected views that an expected fall in oil prices would affect investment in increasing long term oil production capacity.

The economic viability of each project is carefully studied and oil price assumptions are always very cautious, he said, adding that all existing and planned projects were very attractive at current price levels.

Asked about the outlook of crude oil demand growth this year and next year, the minister said OPEC estimated crude oil demand to grow by one million bpd in 2008 and that there might be a slight fall in demand growth next year.

“While economic growth in OECD countries is set to be weak, economic growth in China, India and Russia is expected to remain relatively strong, leading to continued growth in overall demand for crude oil,” Al-Hamli said.

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