The Organization of Petroleum Exporting Countries Tuesday called for output caution, saying oil prices remain vulnerable and reinforcing expectations it will keep output steady when it meets in March.
The Organization of Petroleum Exporting Countries Tuesday called for output caution, saying oil prices remain vulnerable and reinforcing expectations it will keep output steady when it meets in March. "The persisting stock overhang, low seasonal demand and start of refining maintenance point to the need for continued caution over the coming months as market volatility is expected to remain," OPEC said in its January report, in reference to a decision to keep its production unchanged during a meeting last month.
The report comes after oil ministers from OPEC members Qatar and Libya said in recent days that they saw no need to change output at current prices. OPEC is next due to meet in Vienna on March 17.
In its report, OPEC said an unexpected global cold snap could not fully explain a recent oil-price rally, saying it was also driven by an investment inflow in commodities market.
U.S. West Texas Intermediate oil prices averaged $82.5 a barrel early January, "the highest starting point in recent years" with the exception of 2008, OPEC said.
The report said: "Should developments turn out to be less positive than expected, market attention will revert back to weak oil fundamentals," which include high oil inventories. "Prices are likely to be particularly vulnerable to economic developments during the upcoming low-demand second quarter," it said.
OPEC kept its world oil demand forecast for 2010 nearly unchanged from last month's estimate. Demand is expected to grow by 0.8 million barrels a day in 2010 to average 85.1 million barrels a day.
Based on secondary sources cited in its report, compliance to OPEC's agreed cuts fell to 56% in December, down from 58% in November.