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OPEC shrugs off equities fall before production meeting
AP Photo/Richard Dre
Two specialists look at a graph on screens at a post on the floor of the New York Stock Exchange, Wednesday, March 14, 2007.By Ben Perry
AFP
VIENNA
Petroleumworld.com 03 15 07OPEC ministers on Wednesday brushed off the slump across world stock markets but said oil demand could still be hit should a downturn for equities linger and lead to slower US economic growth.
"I think it's just a blip," OPEC President Edmund Daukoru told reporters in Vienna in reference to the heavy falls to global equities on Wednesday, particularly in Asia and Europe.
"I don't see it having a too long-term effect on the global economy," Daukoru, who is also Nigeria's energy minister, added on the eve of a meeting on production by ministers from the Organization of Petroleum Exporting Countries.
"I don't think it could affect oil demand," he said.
OPEC was expected to keep its output target at 25.8 million barrels of oil per day on Thursday, as oil prices remain around 60 dollars -- a level deemed satisfactory by the 12-member cartel.
"It's most likely (that OPEC will decide on) a roll-over" of current production on Thursday, Daukoru said.
Iraq is not included in the quota system as its output is disrupted by violence, nor is Angola, OPEC's newest member, which has yet to be handed a target.
Ahead of the meeting, OPEC ministers have also said they are happy with the current supply and demand levels for oil.
Stock markets in Asia and Europe fell heavily again Wednesday, closing down by more than 2.5 percent on average, after an overnight slump on Wall Street over signs of trouble in the US housing sector.
US stocks were down by about 1.0 percent shortly after the close of stocks trade in Europe on Wednesday.
The losses reversed much of the markets' tentative recovery from the global equities' rout late last month driven by worries about China's rapidly rising stock market and the slowing US economy.
"So far we are not very much worried" about the heavy losses, Shukri Ghanem, head of Libya's National Oil Company, said Wednesday in Vienna, where OPEC is headquartered.
He said that weakening share prices could have an impact on US economic growth but noted it was "premature" to assume this happening.
Meanwhile, an "economic slowdown will have an impact on (oil) demand," Ghanem added.
UAE Energy Minister Mohammad al-Hamli said on Tuesday that the slump on stock markets was a "normal correction" and thus there was no OPEC concern about an economic downturn hitting oil demand.
World oil prices fell slightly on Wednesday amid news that stockpiles of US crude had risen last week.
"The oil market is somewhat resilient to the turmoil in financial markets," said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore.
Meanwhile in London, experts said OPEC would have to think about actually increasing output in coming months owing to a tighter supply situation.
But Nigeria's Daukoru said it was "not realistic" to expect that OPEC would increase production before the end of 2007.
"The second quarter is going to be a soft quarter and there will be some excess (of oil supply). I really worry about that," he said, adding that there could be excess also in the fourth quarter after a more balanced situation in the third.
Regarding Thursday's OPEC meeting, Global Insight analyst Simon Wardell said the cartel could still surprise, although this was unlikely.
Looking ahead, he added: "I think they'll have to revise in a couple of months. The chance is that they'll have to revise up because the market looks quite tight to me going into the third quarter and even maybe a little bit in the second quarter."
The International Energy Agency signalled on Tuesday that the oil cartel would need to boost exports ahead owing to weak energy inventories.
Reporters gathered in Vienna were still awaiting comment from Ali al-Nuaimi, oil minister of Saudi Arabia -- the world's biggest oil producer.
AFP 14 1727 GMT 03 07
Copyright© 2007 AFP. All Rights Reserved.
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