Dismisses $ 90 OPEC oil price as a "bump" Keep the new production targets

OPEC last week's discount price of $ 90 oil and kept its production targets unchanged yesterday, betting on storage supplies and a fragile global economic recovery will prevent oil from rising.

Supply and demand "balance" and $ 70 to $ 80 is a "good price" for oil, Saudi Oil Minister Ali al-Naimi said the group's meeting in Quito, Ecuador. OPEC expected demand growth will slow the economy struggles to recover amid ample supplies, according to a statement from the group.

"The subject looked at was whether $ 90 is a blip or a trend," said Bill Farren-Price, founder of oil consultancy Intelligence Policy, based in Winchester, UK "They have taken the view that there exceptional factors such as the cold wave, a weak dollar, is not maintained in the new year. "

The Organization of Petroleum Exporting Countries has kept the production limits of 24.845 million barrels per day since December 2008 when it announced the largest reduction in production quotas increasing demand collapsed and prices plummeted the onset of global recession. Oil fell more than $ 100 in the second half of 2008 to $ 32.40 a barrel.

Oil prices rose to the highest level since October 2008 last week in cold weather forecasts for the U.S. and Europe and the U.S. speculation may extend the stimulus, causing the dollar to weaken. A falling dollar increases the appeal of commodities as an alternative investment.

Oil Price

Crude futures fell 58 cents on 10 December to $ 87.79 a barrel on the New York Mercantile Exchange, the lowest close since Dec. 1. The contract touched $ 90.76 on 7 December. Futures fell 1.6 percent last week, while they have increased 24 percent from a year ago.

"The market is better than before, but not good because the rate of global GDP growth is low," said Iranian Oil Minister Masoud Mir-Kazemi.

The Organization for Economic Cooperation and Development lowered its 2011 global growth forecast last month to 4.2 percent from 4.5 percent in May, predicting a "soft spot" as the stimulus spending fades before investment drives a 2012 revival.

"Right now the market is very convenient for consumers," said OPEC Secretary General Abdulla El-Badri. There is "plenty of oil" in the market, OPEC will take steps to increase production to levels decline. Compliance with the quota is about 60 percent, he said.

OPEC supply

OPEC has 6 million to 7 million bpd of spare capacity, El-Badri said. OPEC supplies about 40 percent of the world's oil.

The International Energy Agency said on 10 December that the world oil supply rose by 400,000 bpd to 88.1 million bpd in November, its highest level in history, largely on increased non-production OPEC. World production has grown by 1.6 million barrels a day over the previous year. Half of this comes from non-OPEC producers, the Paris-based group said in its monthly oil market.

"The market is well supplied and does not require a price of more than $ 90 a barrel," said Edward Morse, director of commodity research at Credit Suisse Group AG in New York, in an interview.

Global growth in demand for oil is projected to slow to 1.6 percent in 2011 from 2.8 percent this year, according to the IEA.

2011 Demand

The "increase in average annual oil demand in 2011 is likely to be lower than in 2010, according to the statement of OPEC. Accompanied by lower demand "challenging risks for the fragile global economic recovery, including the negative effects of possible conflicts currency and banking crisis fears of a second in Europe, all of which have a negative impact on oil demand."

Europe to the debt crisis has led to bailouts of Greece and Ireland this year and EU leaders are discussing plans for a permanent financial support. The European Central Bank has increased the purchase of bonds of the most indebted countries in the region to avoid loss of market goes.

Oil prices rise to $ 100 per barrel next year, a "fair" price for producers and consumers to offset the weak dollar, Venezuelan Energy and Petroleum Rafael Ramirez said. Prices "are recovering, the economy is showing a slow but steady recovery we must reach these levels at some point next year."

12 members of OPEC are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, UAE and Venezuela. Iraq is exempt from the quota system. The next meeting is in June at the OPEC headquarters in Vienna.

"If they start producing more, that implicitly or explicitly start sending a signal to the market who want to slow down the prices," said Mike Wittner, head of oil market research at Societe Generale SA in New York. "They seem to have enough oil inventories remain high and crude inventories in the U.S. in particular are still quite broad."