OPEC members agree to hold steady on oil output
OPEC decided Thursday to stick to existing output levels while paying more attention to curbing overproduction -- a decision that could push prices higher by taking as much as 700,000 barrels of crude a day off world markets.
After the decision by the Organization of the Petroleum Exporting Countries, light, sweet crude for April delivery slipped 9 cents to $58.07 a barrel on the New York Mercantile Exchange.
OPEC members have generally expressed satisfaction with their oil fetching about $60 a barrel in recent weeks, and their decision to stick with the status quo reflected their desire to keep prices around that level.
“The market is stable, the market is healthy,” OPEC Secretary Gen. Abdalla Salem Badri of Libya told reporters. “We don’t need to touch it this time.”
Still, output could fall even without newly mandated reductions if ministers implement cuts agreed on in the last four months. In meetings in Qatar in October and Nigeria in December, OPEC agreed to take a combined 1.7 million barrels a day off global oil markets as it sought to shore up sagging prices and shrink burgeoning inventories.
But actual cuts have fallen short of that target by about 700,000 barrels a day, meaning that if the overhang is eliminated, shortfalls could develop -- tightening a market that is already relatively stretched.
The International Energy Agency said Tuesday that OPEC’s daily production was about 400,000 barrels short of what it should pump to meet world demand.
OPEC’s record of compliance with output reductions is spotty, and it was unclear how much -- if any -- of the daily 700,000-barrel overproduction would be taken off the market.
But even a partial cutback could drive up prices. Even without being fully implemented, the two cuts have led to prices rising from less than $50 a barrel just a few months ago to the present $60 levels.