|
 The group plans to meet again Feb. 1 for a review of that decision, and that was expected to keep price swings relatively restrained.
The decision by the 13-nation Organization of Petroleum Exporting countries appeared to reflect OPEC concerns that it would be counterproductive to raise overall production quotas as prices have retreated about 10 percent from recent record highs.
It also seemed to suggest that OPEC now views prices near or above $90 -- an increase of about $40 since the start of the year
-- as acceptable.
Still, OPEC's announcement that it would meet early next year for a review of the world economy and other factors indicated that the organization was prepared to increase quotas should prices go much higher.
A final communique from OPEC's oil ministers' meeting in Abu Dhabi said the group would leave output unchanged "for the time being," because the world was "well supplied" and crude reserves at comfortable levels.
"We have enough stocks in the market," OPEC Secretary-General Abdalla Salem el-Badri said after the decision was reached. "There is no reason for prices to go (to) $100 a barrel.
Still, the statement expressed concern about market volatility driven by speculation
-- and suggested it was ready to step in if needed by taking "every measure deemed necessary to keep market stability through the maintenance of supply and demand in balance."
European and U.S. benchmark crude prices gained strongly even before the announcement after Shokri Ghanem, Libya's chief oil official previewed the formal decision. Each added around $2 to surpass $90 a barrel before falling back a bit.
[to top of second column]
 |
 Light, sweet crude for January delivery on the New York Mercantile Exchange was trading at $89.32, up $1 a barrel from Tuesday's close shortly after the official announcement of OPEC's decision.
OPEC oil ministers went into the meeting facing a tough choice. Agreement on an increase in output ceilings would have reassured volatile markets that have seen wild swings over the past few weeks, including a nearly $10 drop over five days last week that was the largest ever in nominal terms.
But such a decision could have sharply accelerated oil's decline in price
-- which, if it continues long term would cut into OPEC revenues already suffering from a weak dollar.
An OPEC decision to raise output just before the 1997 Asian financial crisis led to oil prices plummeting from $20 to $12 a barrel
-- a development ministers appeared determined to avoid amid uncertainty on the state of key world economies.
Oil analyst John Hall of John Hall Associates in London expressed surprise at the decision to stick to present quotas.
OPEC argues that "because the price has fallen by 10 percent over the past week the market is stabilized," he said. "What they won't accept is that the price of oil has fallen because the market was of a view that they would increase output."
Still, he said that any OPEC decision to meet in January should cap prices at around the $90-95 level as traders wait to see what that gathering decides.
"There is uncertainty as to what they're going to do," he said. "And that level of uncertainty will prevail until we know ... what they will do and how they implement what they decide to do."
[Associated Press; By GEORGE JAHN]
Copyright 2007 The Associated Press. All rights reserved. This
material may not be published, broadcast, rewritten or
redistributed. |
