OPEC president says no plan yet to cut oversupply at June meeting

OPEC president says no plan yet to cut oversupply at June meeting

Amman (Platts)--20May2005


OPEC is unlikely to trim its crude output at its June 15 meeting if demand is
still strong, top OPEC officials said Friday. The cartel's Kuwaiti president,
Sheikh Ahmed Fahed al-Sabah, was asked whether OPEC would cut supply in
response to an oil price drop of more than ten dollars since early April.
"Until now, no," Sheikh Ahmed said. "This will depend on growth in demand."
Acting secretary-general Adnan Shihab-Eldin said OPEC would supply whatever
the market needed and that if demand remained strong, no supply cuts were
expected. "It depends on what the market needs," Shihab-Eldin said. "If the
market needs the oil, we will not cut supplies." Indeed, he indicated, OPEC's
inclination was to keep markets well supplied in order to meet expected demand
growth in the second half of this year. "There are expectations to continue to
supply the market with adequate supplies to keep prices stabilized," he said.
"OPEC will keep the market well supplied ahead of expected demand growth in
the third and fourth quarters."

The two OPEC officials were speaking on the sidelines of the World Economic
Forum in Jordan. US light crude prices traded at an all-time high of
$58.28/bbl April 4 but are currently trading below $48/bbl. The drop of more
than ten dollars has raised concerns among some OPEC member countries about
the group's freewheeling output and a shift in policy to allow global oil
stocks to build by more than normal levels so than the expected demand growth
later in the year can be met. Keeping consumer stocks low was a key part of
OPEC's market management strategy until March this year, when Saudi Arabia
signaled a shift that was confirmed earlier this week by oil minister Ali
Naimi who said Riyadh had made a "conscious" decision to allow stocks to grow
ahead of heavier demand in the fourth quarter. Most OPEC members are pumping
at or close to their output capacity limits. Only the Saudis can boast any
significant volume of surplus capacity. They say they are producing 9.5-mil
b/d and can bring on an additional 1.5-mil b/d quickly if needed.

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