The Organization of Petroleum Exporting Countries is unlikely to agree on cutting crude oil output when it next meets in September, a member of Kuwait's Supreme Petroleum Council said Sunday.
"OPEC are unlikely to cut, there's now an economic recovery in consumer countries like China, India and the Far East so this is likely to continue to support the prices," Imad Al Atiqi told Zawya Dow Jones in a telephone interview. Asian governments, like others around the world, have been following expansionary policies to combat the global economic downturn and stimulate their economies, in turn boosting energy demand and crude oil prices.
According to a report issued by the People's Bank of China in August, bank loans in China alone rose by 7.36 trillion yuan ($1.08 trillion) in the six months through June.
Al Atiqi said OPEC members are also absorbing an increasing proportion of their own production as their economies expand, which will offset lower global energy demand and competition from non-OPEC countries like Russia.
"The internal consumption by OPEC countries is also a growing factor, which is often not considered, their consumption is eating into their exports," Al Atiqi said.
Al Atiqi added that the 12-member group, which produces about 40% of the world's oil, would consider raising output if crude prices hit $100 a barrel for at least two months.
"A couple of months at $100 a barrel would raise an alarm as then it won't be desirable for the global economic recovery and would create another cycle in the reduction in demand," he said. "That will not be welcomed by OPEC or consumers."
Crude futures hovered around $70-75 a barrel in August, amid mixed signals about recovery in the U.S. economy.
Friday, light, sweet crude for October delivery settled 25 cents, or 0.3%, higher at $72.74 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled 28 cents, or 0.4%, higher at $72.79 a barrel.
Analysts say crude futures cannot move higher without more conclusive evidence that a global economic recovery is cutting into surplus oil inventories. At the same time, a renewed worsening of global economic conditions could send prices tumbling.
OPEC next meets in Vienna on Sept. 9. The group, in its last meeting in May, kept output levels unchanged after high compliance rates helped prices rebound to about $65 a barrel from levels below $40 a barrel late last year and amid concerns that higher energy costs could thwart economic recovery.