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OPEC to main oil production

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OPEC is widely expected to maintain its official oil production quota when it meets this week, with the cartel satisfied with the current level of crude prices, analysts said.

The Organization of Petroleum Exporting Countries, whose member countries together pump about 40 percent of the world’s crude oil, will likely keep its official quota at 24.84 million barrels a day when it meets on Wednesday.

“At the next OPEC meeting, changes in policy will not be necessary,” with prices expected to remain at a “reasonable level” of between 70 and 80 dollars, the cartel’s president, Ecuadoran Oil Minister Germanico Pinto, said Thursday.

Ahead of the meeting in Vienna — home to OPEC headquarters — the International Energy Agency said emerging markets were driving growth of world oil demand this year, with a big boost from China.

However the IEA also warned that demand for oil, a strong indicator of economic activity, would not recover in advanced economies overall in 2010.

An increase in demand as nations recover from deep recession is being offset by high levels of energy stockpiles, which in turn is preventing prices from pushing far beyond 80 dollars, according to analysts.

“It would be hard to justify further gains from here unless we see persistent stock draws (falls),” said VTB Capital analyst Andrey Kryuchenkov.

He added that while OPEC is set to leave its official output quota unchanged on Wednesday, it may pledge to improve compliance with the target level.

The powerful grouping of 12 Middle Eastern, African and Latin American oil producing countries has had an official output level, excluding production by Iraq, of 24.84 million barrels a day since January 2009.

However the cartel pumped out 26.70 million barrels a day in February, excluding Iraq, and 29.24 million with production from the unsettled nation, the International Energy Agency forecast on Friday.

OPEC could seek greater compliance with the official output quota amid its concern that demand for oil could weaken as governments look to end unprecedented measures that have put countries on a road to economic recovery.

“World oil demand has been highly dependent upon the world economy, supported by government-led stimulus plans,” OPEC said in its latest monthly report published on Wednesday.

“These stimulus plans have already done a great job of jump-starting many sectors of the economy, including energy. However, questions remain as to how long governments will be able to afford supporting their economies,” it added.

Oil prices tumbled from historic highs of more than 147 dollars in July 2008 to about 32 dollars in December in response to the global recession but have since clawed back ground on economic recovery hopes.

OPEC comprises Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. Iraq is the only member without an output quota owing to persistent unrest in the country, while the organisation’s biggest producer is Saudi Arabia.

Source: AFP

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