OPEC may leave the group’s output target unchanged at Friday’s meeting in Vienna because increased demand in the next few months will help maintain the commodity’s price, a local energy analyst said.
Members of the Organization of Petroleum Exporting Countries will review the 30 million barrels a day production ceiling as demand in the U.S. and the Middle East ramps up during the hottest part of the year, said Sadad al-Husseini, who founded Husseini Energy, an independent energy consultant in Dhahran, Saudi Arabia, after retiring from Saudi Arabian Oil Co. in 2004.
OPEC countries don’t have many options other than keeping the current target unchanged, al-Husseini said. “With summer approaching, OPEC countries will need to keep production high to meet seasonal local energy demand.”
The OPEC basket, a weighted average of the main grades produced by the member countries, traded above $100 in the second half of 2012 and for much of 2013, according to data compiled by Bloomberg. It dipped in April amid signs of weakening economic growth and has since recovered.
Conditions in the market are “almost perfect,” with no supply shortages or disruptions, al-Husseini said. “Prices are subject to very limited volatility this year, and they are at a level every producer was dreaming about without hurting demand and consumers.”
OPEC is also focusing on measures to stabilize the market as major oil consumers such as the U.S. are exerting less pressure to lower prices than previous years, said al-Husseini, who was executive vice president for exploration and development at Saudi Aramco before he retired.
OPEC will maintain its 30 million-barrel ceiling at the Vienna gathering, according to 19 of 20 traders and analysts surveyed by Bloomberg News.