OPEC Should Increase Output to Rebuild Inventories, Lehman Says

(Bloomberg) — OPEC, the producer of 40 percent of the world’s oil, should agree to add more supplies to the market when it meets early next month, the chief energy economist of Lehman Brothers Holdings Inc. said.

“What they should do is put more oil in the market to allow inventories to rebuild,” Edward Morse said today in an interview in Amsterdam. Inventories have shrunk to an “extremely low level,” he added.


The Organization of Petroleum Exporting Countries will meet Feb. 1 to discuss production targets in Vienna. The group, led by the world’s top oil exporter Saudi Arabia, left targets unchanged at its last meeting on Dec. 5, ignoring U.S. and European Union calls to pump more oil.

Brent crude oil prices are forecast to average $84 a barrel next year and $78 in 2009, Lehman forecast in a Dec. 10 report. West Texas Intermediate oil, the U.S. benchmark that’s traded in New York, will have the same average prices, the report showed.

“By the end of this year or early next year, the fundamentals will shift,” Morse said, referring to new supply coming on the market, increased refining capacity and slower demand.

Bloomberg