OPEC unlikely to lower output

There is “no way” OPEC will cut production when the group meets again in September, Kuwait’s oil minister said, after the supplier of about 40% of the world’s oil left output quotas unchanged last week.

“We’re not in favor to see the prices in the hundreds because this will fuel recession again,” Sheik Ahmed al Abdullah al Sabah told reporters Sunday in Kuwait City. “We have to give the world economy more time” to recover from its worst recession since World War II.

The Organization of the Petroleum Exporting Countries predicted stronger demand as it decided Thursday in Vienna to keep production quotas unchanged. OPEC agreed at three meetings last year that the 11 members with production quotas would reduce their output by 4.2 million barrels a day.

Oil climbed above $66 a barrel to a six-month high last week as the dollar declined beyond $1.41 against the euro for the first time this year, making raw materials such as oil and gold an attractive alternative investment. Oil prices also gained as U.S. and Asian indicators pointed to a global economic recovery.

“The market is reacting to sentiment rather than fundamentals,” said Sheik Ahmed, who retained his position as oil minister in the new Kuwaiti cabinet announced Friday. “There is a lot of supply, but still the price is rising.”

Kuwait is happy with oil prices at $70 to $80 a barrel, and with the onset of winter in a few months demand will increase, Sheik Ahmed said when asked whether he expected prices to decline in the next few months.

Crude oil for July delivery rose $1.23, or 1.9%, to $66.31 a barrel Friday on the New York Mercantile Exchange, the highest settlement since Nov. 4. Oil advanced 30% in May, the biggest monthly increase since March 1999, when Asia was recovering from the 1997-98 financial crisis.