According to OPEC’s chief, oil prices are expected to remain stable and trade within a defined range, while the cartel’s stocks could reach a 55-day reserve in the next three months.
Sheikh Ahmad Fahd al-Sabah, Kuwait’s energy minister said, “prices as we see them remain within a defined range that they have not breached.” He added that the 11-nation Organization of Petroleum Exporting Countries will allow its stocks of oil to build up to a reserve of 54 to 55 days over the next quarter.
The cartel’s production quota stands at 28 million barrels per day and it decided at a meeting in Kuwait on December 12 not to renew its offer for emergency extra output of two million barrels per day. They will meet again on January 31 in Vienna to assess an expected seasonal drop in demand for energy between April and September, with a possible cut in output.
A factor that may distort the traditional seasonal slump in energy requirements is the oil-guzzling economies such as China and India. OPEC’s report of five days ago, said that world demand for oil will increase by 1.9 percent in 2006 to 84.9 million barrels per day with China accounting for more than one fifth of the increase of 1.6 million over 2005.
The price of oil hit an all-time high of $70.85 per barrel in New York on August 30 following Hurricane Katrina, which devastated refining and crude production facilities along the Gulf Coast of the United States.