With Eye on US Econ Woes, OPEC Likely to Hold Output Steady

Despite calls by the Bush administration and European governments for OPEC to pump more oil, the cartel may actually look to cut output this spring if signs continue to point to increasing oil supplies and diminishing demand.

Such a move could worsen global economic conditions if U.S. financial woes deepen, but OPEC’s quandary over whether to lift or lower its production highlights what a tough year this could be for the 13-member organization. As it prepares to meet this Friday in Vienna, the Organization of Petroleum Exporting Countries faces its murkiest economic outlook in years.
A sharp economic downturn in the U.S. could seriously dampen global demand growth. But the thirst for oil is still intense in China and the Middle East, and could pick up at any time in the developed world.

On the supply side, a bevy of previously delayed oil projects are now expected to start delivering the goods. But it’s unclear whether output from non-OPEC suppliers in Africa and Latin America will be large enough to make a real market impact.

Amid such uncertainty, and with crude now trading at around $90 a barrel, OPEC ministers and officials say the group is likely to hold its formal output quotas steady at its Feb. 1 meeting in Vienna, but could move to cut output at its next meeting in March.

Rigzone