OPEC Agrees to Keep Oil Production Quotas Unchanged

Sept. 10 (Bloomberg) -- OPEC said it will keep oil production quotas unchanged, banking on a recovery in the world economy to maintain prices near today’s $71 a barrel.

The Organization of Petroleum Exporting Countries agreed to maintain total production quotas at 24.845 million barrels a day, and will urge members to adhere to their targets, OPEC Secretary-General Abdalla El-Badri in a press briefing. It’s the third time this year group has met without revising the figure.

“Holding production was the prudent thing to do,” Jason Schenker, president of Texas-based consultants Prestige Economics LLC, said in an interview in Vienna.

The producer group, which accounts for about 40 percent of global crude supply, had been expected by analysts and most ministers to keep output unchanged after prices rallied. Oil has gained 61 percent this year, last month reaching the $75 level identified by Saudi King Abdullah as satisfactory for consumers and producers.

Crude oil advanced for a fourth day and has gained 61 percent this year. The contract for October delivery traded up 31 cents, or 0.4 percent, at $71.67 a barrel on the New York Mercantile Exchange as of 8:48 a.m. in Singapore.

“This $65 to $75 range seems amenable to both producers and consumers,” Schenker said. “If they’d cut when production is above quotas, and prices are amenable, it may not have been received well.”

Three-Hour Talks

Algerian Oil Minister Chakib Khelil and Qatari Energy Minister Abdullah bin Hamad al-Attiyah confirmed the decision as they left OPEC’s headquarters at about 1 a.m. Vienna time today, after closed door talks lasting three hours.

“OPEC has played its cards very well,” considering that there has been a significant economic slowdown in some of the major consuming nations and regions, said Toby Hassall, a research analyst at CWA Global Markets Pty in Sydney. “They were probably correct in not cutting output further at the beginning of this year. They have to be relatively happy with where prices are”

OPEC agreed late last year to cut production targets by 4.2 million barrels a day after prices crashed more than $100 a barrel from a record set in July 2008. Oil dipped to $32.40 in December before recovering this year. In the past five months, production has risen from the 11 OPEC members bound by quotas.

The 11 members bound by quotas pumped 26.055 million barrels a day in August, according to estimates in a Bloomberg survey, which indicates quota compliance of about 71 percent.

Compliance Improving

Compliance with existing production quotas is improving and prices may rise further by the end of the year, Algeria’s Khelil said. Late yesterday, Ali al-Naimi, the oil minister for Saudi Arabia, OPEC’s biggest producer, told reporters “we are enjoying a good, fair price” for oil, so any slippage in compliance with production quotas is not a concern while prices are “perfect.”

Ministers from several OPEC member states including Kuwait and Venezuela had said this week they didn’t expect any change in allowed production volumes. Quotas were last changed in December. All 26 analysts surveyed by Bloomberg News last week also forecast no change in quotas.

Only Saudi Arabia, Kuwait and Qatar pumped less than their target last month, according to Bloomberg estimates. Iran, Angola and Venezuela were the biggest quota busters. Iraq is the only OPEC member which does not have production limits.

“Everybody should adhere to his production allocation,” OPEC’s el-Badri said. There are “positive signs” oil demand will pick up in 2010, he added.

Oil Demand Rising

World oil demand is expected to rise 1.6 percent next year to 85.25 million barrels a day, according to a report last month by the Paris-based International Energy Agency, led mainly by gains in developing nations.

OPEC members will make $559 billion in net sales from crude exports this year, down 42 percent from 2008, the U.S. Energy Department reported. The figure was little changed from last month’s forecast of $555 billion. OPEC made $971 billion last year and is forecast to make $675 billion in 2010.

OPEC will meet next in Luanda, Angola, on Dec. 22, and again in Vienna on March 17 next year, the group said.