Analysts say no change in oil quotas at December OPEC meeting

OPEC will not change the quotas for oil production at a forthcoming meeting December 22nd, Western analysts believes. “Oil prices are at or above the levels that the cartel believes are appropriate,” the Energy Department Director at the Italian Liberal Research Center Bruno Leoni, Carlo Stagnaro, wrote Trend Capital in an e-mail.

As a result of Wednesday Auctions, November 25, the price for January’s futures contract for US light crude WTI rose by $1.94 to $77.96 per barrel on the NYMEX. On the London Stock Exchange the price of January’s futures for North Sea Brent crude oil rose by $1.98 to $78.44 per barrel.

At its last September meeting, OPEC left its oil production quotas unchanged. Today the level of oil production by 11 OPEC countries (excluding Iraq) is 24.85 million barrels per day. In 2008, OPEC decided to reduce oil production at 4.2 million barrels per day. Nevertheless, the cartel does not adhere to the quota. Under the OPEC report, in October production of 11 countries will be increased by 50,000 barrels per day to 26.52 million barrels per day.

Under the estimates of the US EIA, OPEC oil production for three quarters of 2009 totaled 29 million barrels a day, which is lower by 2.4 million barrels per day below compared to 2008.

According to Stagnaro, OPEC will not significantly affect the price dynamics with minor changes in production quotas.

“Moreover, since prices are probably incorporating a huge speculative component, I don’t think that minor production adjustments might have significant impacts,” Stagnaro said. “If OPEC wants to really change price patterns, either upwards or downwards, it should make a credible commitment to massive production cuts or boosts, which do not seem to be in today’s agenda.”

Tags:  December, oil quotas, OPEC