Opec meeting begins today

ALGIERS - Opec members must at least show greater discipline and produce within their output quotas for crude if they hope to forestall a sharp decrease in oil prices when seasonal demand falls this spring, the group's president said yesterday.

By (AP)

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Published: Tue 10 Feb 2004, 12:13 PM

Last updated: Thu 2 Apr 2015, 11:50 AM

Representatives of the Organisation of Petroleum Exporting Countries were gathering in Algiers to discuss what action to take to try to keep crude prices from tumbling during the April-June quarter. Opec President Purnomo Yusgiantoro refused to rule out a decision to cut the group's output ceiling of 24.5 million barrels a day when the delegates meet formally today.

"If we don't handle it well in the second quarter, the price may just be dropping rapidly," Purnomo told reporters at an Algerian government-run conference centre. Opec pumps about a third of the world's oil. Purnomo said the group fears that global demand for oil will decline by as much as 2.5 million barrels a day during the second quarter, but its members are currently producing about 1.5 million barrels a day above their output ceiling.

In recent months, this excess output was not a problem because prices were high, Purnomo said. Demand, especially from China, has exceeded expectations, and the market's uncertainty about future crude exports from Iraq has helped underpin the market.

However, prices have eased somewhat since January, with Opec's benchmark blend of crudes at US$28.20 a barrel on Friday compared to Opec's targeted range of US$22-28.

Algeria's Oil Minister Chakib Khelil said Opec must "definitely" take action to prevent a further, substantial decrease in prices. He noted that overproduction was of particular concern.

"A decision will be made to rein in this extra production at least through better discipline," he told reporters. Iraqi Oil Minister Ibrahim Bahr al-Uloum said the group should not change its output target but agreed that member countries ought to show greater restraint.

"We try to ask the Opec countries to stick to their quotas," Ibrahim Bahr al-Uloum told reporters. Several other oil ministers, speaking in recent days, have also played down the prospects of a formal cut in production.

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