LONDON: OPEC oil producers will agree next week to maintain its official output target unchanged to keep prices stable around $70 and to help the world economy to stay on a recovery path, a Reuters poll showed on Thursday. The Organization of Petroleum Exporting Countries, the source of more than a third of the world s oil supply, meets on Sept. 9 in Vienna. Ten analysts in the Reuters poll unanimously said OPEC would choose to leave its official output target unchanged. But to keep swelling oil inventories in check and minimize the risk of any jump in prices at the same time, the producer group will call for stricter compliance with existing supply cuts of 4.2 million barrels per day since September. The poll participants were BNP Paribas, Centre of Global Energy Studies (CGES), Commerzbank, Deutsche Bank, JP Morgan, Landesbank Baden-Wurttemberg, MF Global, Petromatrix, Societe General and Standard Chartered. I do not believe that OPEC will make any formal change to quotas at this meeting without a very dramatic and sudden fall in price in the next week, said Lawrence Eagles, JP Morgan s global head of commodities. At current price levels everyone is satisfied - albeit very nervous about high stock levels. International benchmark U.S. crude futures averaged above $71 a barrel in August, up from the July average of about $65, due mainly to market expectations that the worst of the economic crisis is over, with some countries, including Germany and Japan, exiting recession. However, the price rise had not been underpinned by physical oil demand, analysts said. Oil refiners would not boost crude oil purchases for at least the next three months to match slow end-user consumption of refined oil products, such as diesel and heating oil, Eagles said. Sluggish demand has pushed crude and oil product inventories to historic highs in many of the key consumer countries this year, including the United States and China. Many OPEC ministers have already said the group is likely to make no change to the official output target. At the same time, they have expressed concerns about high oil inventory levels. Cut next year? Still, OPEC would not want to make any official target cut now that would risk a jump in oil prices, which could delay the global economic recovery. Adam Sieminski, Deutsche Bank s chief energy economist, said OPEC would decide to live with oversupply at least for now, and perhaps start cutting output next year. In view of the still fragile economic recovery underway, OPEC seems to be leaning toward a more cautious approach (implying acceptance of higher production) at this meeting, he said. They might then decide to trim some output in early 2010 if demand remains weak. Deutsche Bank and Commerzbank said the group would try to tighten compliance, which has slipped. A Reuters survey on Tuesday showed supplies from OPEC producers, excluding Iraq, rose to 26.2 million bpd in August, putting compliance with the existing cuts at 68 percent, indicating that rising oil prices may be encouraging members to pump out extra barrels. Compliance peaked at 81 percent in March and April. -Additional reporting by Barbara Lewis
