Opec likely to cut oil output

according to analysts.

The Organisation of Petroleum Exporting Countries on Wednesday decided to maintain its oil output ceiling at 30 million barrels per day, which stands about one mbpd below the cartel’s actual production.

At a ministerial meeting in Vienna — where Opec is based — its 12-member countries also chose to re-appoint Secretary-General Abdullah El-Badri to head the organisation for another year after failing to agree on a new leader.

In a concluding statement, Opec said “the biggest challenge facing global oil markets in 2013 is uncertainty surrounding the global economy, with the fragility of the eurozone remaining a major concern.”

It added: “World oil demand is forecast to increase slightly during . . . 2013, (but) this is likely to be more than offset by the projected increase in non-Opec supply” — such as from the US.
“Opec’s overall interest is certainty in demand, and nobody can really tell whether this certainty in demand will be fully there,” independent energy market analyst Karin Kneissl said after Wednesday’s meeting.

Opec, which includes the world’s biggest oil exporter Saudi Arabia among its dozen members, forecast that demand for its crude oil next year was set to contract to 29,7 mbpd — or about 1,5 mbpd down on current output.

The International Energy Agency, which represents consumers, said on Wednesday that non-Opec production was expected to rise to 54,2 mbpd in 2013 following “the highest growth rate since 2010.”
Opec members agree that the oil market “is currently well-supplied and demand for the group’s crude will fall next year,” said Julian Jessop, analyst at the Capital Economics research group.

“The US, Canada and Mexico combined now produce more oil than the total of . . . (Opec’s) Saudi Arabia, Iraq and Iran,” he added.

A weakening of demand for Opec oil risks weighing on high crude prices, despite a background of Middle East unrest, notably over Iran’s disputed nuclear programme.
Benchmark crude oil prices rose above US$108 a barrel on Wednesday on supply concerns after Opec reported a drop in crude production last month, traders said. — AFP.