The Organization of Petroleum Exporting Countries is
choosing to keep its policy options open a week before a closely
watched meeting, despite growing market expectations of a pledge to
increase production.
Remarks made Tuesday by Saudi Arabia's Minister of Petroleum
Ali Naimi, OPEC's opinion leader, highlights the difficult balancing
act facing the 12-member group as it frets over the impact of near-$100
oil amid economic headwinds, rising speculative interest in futures
markets that has undermined producers' clout, and an apparent schism
between OPEC's own dovish and hawkish ranks.
"We need to look at information first. We'll then decide
accordingly," Naimi said of data, including oil inventories, held by
consumer nations.
"Prices (are) determined by the market... Prices go up and
down, that's what the market does," he said, relying on a common
refrain from OPEC officials who don't want to commit publicly to policy
outcomes.
OPEC ministers last met Sept. 11 at their Vienna
headquarters and decided to raise output from Nov. 1 by 500,000 barrels
a day.
However, the additional supply - now trickling into markets,
tanker trackers say - failed to damp buying interest from hedge funds
that are riding on expectations of a supply squeeze over the Northern
Hemisphere winter, usually a high-demand season.
As a result, benchmark U.S. light sweet crude futures have rallied, hitting a nominal record high of $99.29 a barrel Nov. 21.
OPEC heads of state met Nov. 17-18 in Riyadh but didn't
discuss policy, but ministers will gather again next week in Abu Dhabi.
Leading importing nations such as the U.S. and Japan are
meantime facing shrinking oil stockpiles, and industry analysts say
OPEC, which pumps about 40% of the world's crude, needs to step in.
"The markets have yet to discount the outcome of the OPEC
meeting on Dec. 5, where there will be immense - and we believe
ultimately successful pressure - on the cartel to raise quotas," said
Edward Meir at MF Global.
No Guarantees
Still, Naimi refused to be drawn into
committing to a possible output hike decision next week, saying he
doesn't know when members will decide.
He spoke during a rare visit to Singapore, where he's
scheduled to speak Wednesday at the Middle East & Asia Energy
Summit.
OPEC's president this year, United Arab Emirates Minister of
Energy Mohamed Al Hamli, also in Singapore for the same event, declined
to speak when contacted by Dow Jones Newswires.
Still, some members from the more dovish camp led by Saudi Arabia are speaking in favor of additional supply.
Indonesia will support an OPEC output hike to counter rising
prices, Minister of Energy and Mineral Resources Purnomo Yusgiantoro
said in Jakarta.
"We are fine" with an increase of 500,000 barrels a day, he said.
It's widely recognized Indonesia - a net oil importer - has been looking to cushion the impact of high oil prices.
Iraq's Oil Minister Hussein al-Shahristani said OPEC was
likely to increase the group's output by 500,000 barrels a day when it
meets on Dec. 5.
"A production increase has been put on the agenda of OPEC's
extraordinary meeting which will be held in Abu Dhabi," al-Shahristani
told Dow Jones Newswires in a phone interview from Baghdad. "The
potential for that increase for the time being wouldn't exceed 500,000
barrels a day."
OPEC hawks such as Iran, Venezuela and incoming member
Ecuador point to a weak U.S. dollar as evidence that oil prices aren't
too high, and routinely downplay talk about exporting more to countries
they consider amply-supplied.
Output from the group's 10 members with self-imposed quotas,
excluding Iraq and Angola, stood at 27.275 million barrels a day in
October, or 22,000 barrels a day above targets, according to a recent
Dow Jones Newswires survey.
Saudi Arabia is pumping 9 million barrels a day, Naimi said Tuesday.
Late Monday, traders cited a report from CNBC television,
which quoted Saudi oil ministry sources as saying the kingdom is
already raising its output ahead of next week's OPEC meeting, as a
trigger for a selloff.
At 0820 GMT, New York Mercantile Exchange crude futures for
January delivery traded at $96.99 a barrel, down $0.71 in the Globex
electronic session.