No high jinks expected at OPEC's high altitude meeting in Ecuador
By Margaret McQuaile
November 23, 2010 - There are just two and a half weeks to go before OPEC holds what will probably be, at close to 2,900 meters, its highest ever meeting.
But the upcoming December 11 meeting in Quito, Ecuador, is unlikely to be accompanied by any high jinks as far as outut adjustments are concerned.
Oil prices seem to have settled, at least for now, in the low $80s/barrel after a recent flurry that took them close to $90, and ministers have started making noises about rollovers.
The oil producer club will undoubtedly have updated information to consider when they meet in Quito, but the Vienna secretariat's most recent report, released earlier this month, was more optimistic about the likely call on OPEC crude in 2011 than the previous one in October.
Demand for OPEC crude next year is expected to average 29.19 million b/d -- 380,000 b/d more than previously forecast.
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Fourth-quarter demand this year is forecast to average 29.3 million b/d, the same as the group's estimated average production in October as derived from secondary sources.
At the same time, OPEC is not at all worried about any unexpected surge in demand during the winter months, saying that crude and refined product inventories in the industrialized world will be able to cope with any such development.
Since ministers last met on October 14, when they agreed to leave official targets unchanged at 24.845 million b/d for the 11 members bound by quotas, world oil markets were temporarily unnerved by an oil price that climbed and climbed.
Comments by Ali Naimi, oil minister of OPEC kingpin Saudi Arabia, along the lines that some oil consumers hoped the price of crude would remain below $90/b spurred a flow of analysis suggesting that the world's biggest oil exporter had changed its pricing policy in favor of a higher range.
In fact, Saudi Arabia had done no such thing, as a senior Saudi source told Platts, and Saudi policy continues to favor a range of $70-$80/b.
As does Saudi Arabia's Gulf neighbor Qatar, whose oil minister, Abdullah al-Attiyah, said November 22 that oil prices of between $70 and $80/b were "reasonable." Attiyah also said he saw no need for OPEC to change its output quotas in Ecuador.
In fact, Attiyah will not travel to Quito for next month's meeting. Instead, he will remain in Qatar to celebrate the country's achievement in boosting annual LNG production to 77 million metric tonnes.
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OPEC expects its crude quality to improve over next few years