VIENNA—OPEC meets on Monday against the backdrop of a $12 fall in the oil price since mid-July but ministers say they are unlikely to tamper with output ahead of peak winter demand and with supply worries ever present.
For a year, OPEC has been pumping close to its fastest rate for 25 years to guard against price shocks and ease pressure on consumer economies. The policy has worked and prices have sunk from a record $78.40 a barrel on July 14 to about $66 on Monday.
"OPEC in general and Saudi Arabia in particular have done their best to supply the world with what it needs energy-wise," Saudi Oil Minister Ali Al-Naimi Naimi told reporters when he arrived here at the weekend.
"So you see inventories today are very comfortable, prices are coming down and I hope no one is concerned about shortage of supply."
At Monday's meeting OPEC will consider a recommendation from its advisory committee that it keep its 28 million barrels per day production ceiling, for now, but leave the door open to another meeting before December if prices drop sharply.
Forecasts that demand for OPEC oil will decline in 2007 are worrying some in the group that pumps a third of the world's crude. They fear a price slump. Some ministers, including OPEC President Edmund Daukoru, have said OPEC may have to cut its output ceiling before the end of the year.
"We have been oversupplying since about mid 2003, " Daukoru, also Nigeria's energy minister said on Sunday.
OPEC ministers will take a critical look at the supply-demand situation, he told reporters on Monday. "We'll look at a little bit more than simply rolling over."
But OPEC sees no need to cut production yet – oil is still up $5 this year and three times the price at the start of 2002, the beginning of a four and a half year rally.
Ministers are mindful that the Atlantic hurricane season still has several weeks to run and U.S. Gulf of Mexico oil output has yet to recover fully from last year's storms.
Iran's disagreement with the United Nations Security Council over its uranium enrichment programme also has the potential to drive prices higher. The United States favours sanctions against the world's fourth biggest oil exporter.
A quarter of Nigeria's oil output lies idle because of militant attacks and Iraq's exports are vulnerable to sabotage.
"I don't think we'll discuss a production cut today, not yet. Maybe later this year," Qatari Oil Minister Abdullah al-Attiyah told Reuters ahead of Monday's meeting.
Slowing Demand Growth
Surging oil prices boosted the value of OPEC's crude oil exports by 45 percent to a record $513 billion last year.
But there are signs that economic activity is easing in top consumer the United States, and the second biggest consumer China has raised lending rates to try to cool its economy.
OPEC's economists are forecasting demand for OPEC oil will drop 800,000 barrels per day to an average 28.3 million barrels per day in 2007 as new non-OPEC production comes onstream.
The latest U.S. car sales data show increasing numbers of U.S. drivers are trading in their sports utility vehicles for smaller, more fuel efficient cars.
Carl Calabro of PFC Energy in Washington said the real test for the organization may come early next year.
"The concern is what happens to the price in spring when demand falls. World inventories are quite adequate at the present time," he said. Analyst John Hall of John Hall Associates said it would be very difficult for OPEC to persuade consumer nations of the need for an output cut now.
"I would be very surprised indeed if it's not a roll over, simply because politically I don't think it's the right time for OPEC to try to increase prices," he told Reuters.
