OPEC to Hold Oil Output Steady

OPEC has decided to hold its oil production target steady but plans to meet again in February to consider whether to cut output to match an expected decline in demand.

The cartel’s decision to maintain the current production level was widely expected.

The Organization of the Petroleum Exporting Countries, which supplies about a third of the world’s oil, will keep its daily production ceiling at 25.4 million barrels of crude, spokesman Omar Ibrahim said at a news conference Thursday.

And despite fears that OPEC, led by Saudi Arabia, might seek permanently higher prices, the group made no change in its desired price range of $22 to $28 a barrel for an index of crude grades it tracks.

However, OPEC’s 11 members decided to meet again Feb. 10 to reassess the possible need for a future cut, out of concern that prices might plunge during the second quarter of 2004.

Demand typically ebbs to an annual low in the spring as warmer weather in the Northern Hemisphere reduces the need for home heating oil.

“We believe then we will discuss if we need to cut,” OPEC President Abdullah ibn Hamad al Attiyah of Qatar said.

U.S. crude oil futures in New York, which often trade above OPEC’s global index range, rose 16 cents to $31.26 a barrel.

For the next few months, the weather will have a greater influence on U.S. crude prices, and thus home heating costs and gas pump prices, than the latest OPEC decision, said Tom Kloza, director of Oil Price Information Service.

Cold weather in the East has helped drive up natural gas prices in recent days. Rising natural gas prices can have the effect of pulling oil up as well.

Longer term, Saudi Arabia and some other OPEC members have suggested that they may seek to keep oil prices high to compensate for the weak dollar, because oil is priced in dollars worldwide. A falling dollar means oil revenues are worth less to OPEC members.