OPEC set for easy oil deal, secretary-general dispute

Oil prices are roughly where OPEC wants them - comfortably above $100 a barrel - but there is deadlock over who should replace Libyan Abdullah El-Badri as the public face of the organization.

At a meeting in Vienna on Wednesday the 12-member Organization of the Petroleum Exporting Countries is widely expected to retain its 30 million barrel a day (bpd) output target for the first six months of 2013.

“The world economy is weak and supply will be running ahead of demand, which could justify a cut of around 500,000 barrels a day, but political factors will prevent OPEC from taking any formal action,” said a senior OPEC delegate from a Gulf producer.

“At current prices there is little incentive to change either the 30 million OPEC-wide production target or to reduce actual production, running around 31.0 million,” said Washington consultancy PFC Energy.

OPEC’s own maths suggest that, despite oil prices at a lofty $107 a barrel, it is pumping more than world markets need - pointing to a potential stockbuild and the possibility of a fall in prices at the start of next year.

Experts meeting on Monday at OPEC headquarters in Vienna agreed that demand for OPEC crude in 2013 would average 29.7 million bpd, suggesting current output will build stocks by 1.3 million bpd on the 90 million bpd world market.

Oil inventories in industrialised OECD countries have risen to nearly 59.6 days of future demand, according to the International Energy Agency, significantly above the fiveyear average for the first time in 2012.