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OPEC Members Seek $100 Oil to Counter Dollar Weakness (Update2)
2010-10-15 10:18:13.676 GMT
(Adds Federal Reserve policy in 11th paragraph.)
By Grant Smith and Fred Pals
Oct. 15 (Bloomberg) -- The 13 percent decline in the Dollar
Index since June has led some OPEC members to call for oil to
rise to $100 a barrel.
The U.S. currency's weakness means the "real price" of
oil is about $20 less than current levels, Venezuelan Energy and
Oil Minister Rafael Ramirez said after yesterday's meeting of
the Organization of Petroleum Exporting Countries in Vienna. The
group, which accounts for 40 percent of global crude output,
left targets unchanged and called for greater adherence to
quotas, which are being exceeded by a supertanker load a day.
"OPEC is not interested in compliance right now," Nordine
Ait-Laoussine, the former Algerian oil minister who now runs
Geneva-based consultant Nalcosa SA, said in an interview in
Vienna. "They're concerned about the dollar because as the
dollar weakens, prices go up. They're not paying any attention
to production discipline."
The Dollar Index, which tracks the currency against those
of six U.S. trading partners, was at 76.48 at 11:08 a.m. in
London today, near its lowest level since December, from a 2010
high of 88.405 on June 7. It has dropped 6.1 percent in the past
month. The nominal value of OPEC's net oil export revenue will
be $818 billion in 2011, 10 percent more than this year,
according to U.S. Energy Department forecasts.
OPEC is exceeding its own quotas as prices rise above the
$70-to-$80-a-barrel band that Saudi Oil Minister Ali al-Naimi
said is "ideal." The International Energy Agency estimated
that the group achieved 54 percent of its promised supply cuts
in September.
'Love' $100
Shokri Ghanem, chairman of Libya's National Oil Corp., said
a higher crude price would help OPEC offset the loss of revenue
from the weaker dollar.
"We would love to see $100 a barrel," Ghanem said
yesterday in Vienna. "We're losing real income. Libya in
particular would like to see a higher oil price."
Kuwaiti Oil Minister Sheikh Ahmad al-Abdullah al-Sabah said
in an interview this week that $70 to $85 is the "most
comfortable" range, while his Algerian counterpart, Youcef
Yousfi, said between $90 and $100 is "reasonable."
Crude for November delivery rose 3 cents to $82.72 a barrel
in electronic trading on the New York Mercantile Exchange today,
paring yesterday's 0.4 percent decline. Oil gained 9 percent in
the past month.
'Perfect Price'
"So far, the perfect price has been $60 to $80, and now
they're talking about $80 and $100," said Sean Brodrick, a
natural resource analyst with Weiss Research in Jupiter,
Florida. "This all tells me OPEC is quite happy with higher
prices and quite unhappy with the fall in the U.S. dollar."
Speculation that the Federal Reserve may further loosen
monetary policy through so-called quantitative easing has
weakened the dollar. Fed Chairman Ben S. Bernanke, who will be
speaking in Boston today, said Oct. 4 the central bank's first
round of large-scale asset purchases aided the economy and
further buying is likely to help more.
OPEC kept its production target at 24.845 million barrels a
day at its meeting yesterday. Output from the 11 members bound
by quotas exceeds the group's ceiling by 1.9 million barrels a
day, or about the same as produced by Nigeria or Angola,
according to Bloomberg estimates.
While ministers talked of the need for greater adherence,
OPEC no longer even publishes the individual national targets.
The group quota "is all you need to know," OPEC Secretary-
General Abdullah El-Badri said at a press conference yesterday.
The group agreed to a record 4.2 million barrel-a-day cut
in production in late 2008 as global demand fell 0.6 percent,
the first decline since 1983. Compliance reached a peak of 79
percent in March 2009, based on Bloomberg data.
'Well Supplied'
"The market is well supplied," Al-Naimi said yesterday.
"It is an ideal situation we are in now. Nobody is complaining.
Consumers are happy, producers are happy. Companies are
investing."
Oil consumption worldwide will average 86.9 million barrels
a day in 2010 and 88.2 million barrels a day in 2011, the Paris-
based IEA said Oct. 12 in its monthly report. That's 300,000
barrels a day more than last month's forecast for both years.
The IEA raised its estimate of the amount of oil OPEC
producers will need to provide to balance world supply and
demand. Its new estimate is an average of 29.3 million barrels a
day for next year, or 100,000 barrels a day more than the
agency's estimate for 2010.
--With assistance from Margot Habiby in Dallas, Ayesha Daya and
Ola Galal in Vienna and Fiona MacDonald in Kuwait. Editors: Raj
Rajendran, Steve Voss.
To contact the reporters on this story:
Grant Smith in Vienna at +44-20-7330-7353 or
gsmith52@bloomberg.net
Fred Pals in Vienna at +31-20-589-8563 or
fpals@bloomberg.net
To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or
sev@bloomberg.net
