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OPEC May Keep Target as Oil Demand Set to Rise


OPEC may leave the group’s output target unchanged at Friday’s meeting in Vienna because increased demand in the next few months will help maintain the commodity’s price, a local energy analyst said.

Members of the Organization of Petroleum Exporting Countries will review the 30 million barrels a day production ceiling as demand in the U.S. and the Middle East ramps up during the hottest part of the year, said Sadad al-Husseini, who founded Husseini Energy, an independent energy consultant in Dhahran, Saudi Arabia, after retiring from Saudi Arabian Oil Co. in 2004.

OPEC countries don’t have many options other than keeping the current target unchanged, al-Husseini said. “With summer approaching, OPEC countries will need to keep production high to meet seasonal local energy demand.”

The OPEC basket, a weighted average of the main grades produced by the member countries, traded above $100 in the second half of 2012 and for much of 2013, according to data compiled by Bloomberg. It dipped in April amid signs of weakening economic growth and has since recovered.

Conditions in the market are “almost perfect,” with no supply shortages or disruptions, al-Husseini said. “Prices are subject to very limited volatility this year, and they are at a level every producer was dreaming about without hurting demand and consumers.”

OPEC is also focusing on measures to stabilize the market as major oil consumers such as the U.S. are exerting less pressure to lower prices than previous years, said al-Husseini, who was executive vice president for exploration and development at Saudi Aramco before he retired.

OPEC will maintain its 30 million-barrel ceiling at the Vienna gathering, according to 19 of 20 traders and analysts surveyed by Bloomberg News.


6 Comments on "OPEC May Keep Target as Oil Demand Set to Rise"

  1. BillT on Mon, 27th May 2013 12:55 am 

    Limited volatility … until …

    I wonder which black swan will land first to upset this apple cart? It’s going to be a hot summer.

  2. Plantagenet on Mon, 27th May 2013 1:07 am 

    Oil prices are at near record levels—of course the Saudis think the market is in “perfect” condition.

  3. Billc on Mon, 27th May 2013 3:00 am 

    This is what I think. Opec has t
    he ability to ramp down extraction but can not ramp up extraction. I think that they are on full throttle and that they make the past extraction rate to be a pre planned market decision.

  4. BillT on Mon, 27th May 2013 7:20 am 

    Billc, I think you are correct. They are maxed out but cannot admit it. If they ever did, it would be the mad rush to the door for investors.

  5. BillT on Mon, 27th May 2013 2:08 pm 

    BTW: There is a news article saying that the king of Saudi Arabia is dead. Will the riots begin, or the in-fighting by the thousands of Saud cousins and half brothers? Will the price of oil be $150 by Labor Day? A hot summer ahead.

  6. Zap on Tue, 28th May 2013 5:28 am 

    I agree that they probably don’t have the ability to ramp up production. Getting harder as time goes by.

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