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Kuwait, Saudi expect OPEC to maintain current oil output Oil at $110 smoothes path for unchanged output ceiling

RIYADH, June 10, (AFP): Saudi Arabia and Kuwait said Tuesday they expect OPEC to keep oil production levels stable so as not to alter prices at a meeting of the cartel this week. Saudi Oil Minister Ali al-Nuaimi said the market was “stable and balanced” and that he therefore believed there would not be any decision to change output. “The price is at a comfortable level for producer and consumer countries as well as for the oil industry,” he said ahead of Wednesday’s meeting of the Organisation of Petroleum Exporting Countries in Vienna. His Kuwaiti counterpart also said he thought OPEC would keep the oil production ceiling unchanged. “I think that all parameters lead to keeping the production as it is and this, of course, will be reflected in prices” remaining unchanged, Ali al-Omair told reporters in Kuwait City before leaving for the Austrian capital. The 12-member OPEC cartel, which supplies about one third of the world’s crude, is pumping around 30 million barrels of oil daily.

OPEC is also satisfied with current price levels at about $100 a barrel. Oil prices extended their gains on Tuesday ahead of the OPEC meeting while energy market investors kept a close watch over vital Ukraine-Russia gas talks. An oil price comfortably over $100 a barrel leaves smiling OPEC ministers with an easy task to leave things as they are on output policy at their meeting. Brent crude has stayed above that price, the preferred level of top OPEC producer Saudi Arabia, all year and was trading near $110 on Tuesday, supported by the almost total loss of supplies from OPEC member Libya.

Policy
The Organization of the Petroleum Exporting Countries, which pumps more than a third of the world’s oil, is meeting in Vienna to agree policy for the second half of the year. Ministers have said they will leave the output target of 30 million barrels per day (bpd) unchanged, and that the market is well-supplied. “The price is good. Brent is $110, it is not bad,” said Angolan Oil Minister Jose de Vasconcelos.Saudi Arabia’s Oil Minister Ali al-Naimi had yet to arrive in Vienna, but gave his unambiguous view on the meeting last month.

“There is no reason for a change. Absolutely no reason,” he told reporters in Seoul. “Supply is highly sufficient, demand is great and the market is fairly stable.” Riyadh kept production little changed in May, pumping 9.705 million barrels per day, according to industry sources, supporting Naimi’s view that the market did not need more. OPEC has steered a course around the loss of over a million barrels per day of oil from Libya, as the crisis there deepened to its worst since the civil war three years ago. Oil Minister Omar Shakmak said on his arrival in Vienna that output had fallen below 200,000 bpd, a fraction of Libya’s 1.6 million bpd before the conflict. He at least welcomed the oil price. “This is positive for the market, it’s for the benefit of producers and customers alike,” Shakmak said.

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