OPEC raises output, says ready to act if needed

Monday, 14 March 2011 00:03 - - {{hitsCtrl.values.hits}}

LONDON (Reuters) - OPEC maintained on Friday that the world has enough oil despite losses from Libya, pointing to rising output from Saudi Arabia and other members and a looming seasonal slowdown in demand.

In a monthly report, the Organization of the Petroleum Exporting Countries said February output rose 110,000 barrels per day (bpd) to 30.02 million bpd due to extra supplies from Saudi Arabia the highest since December 2008 when the group agreed a record cut in its output.

OPEC has maintained that it does not need to formally raise its oil output, but the latest report adds to signs that oil prices well above $100 a barrel and losses in Libya are encouraging extra supplies from the group.

It said oil inventories would rise if OPEC maintained output at February’s level and European oil refineries - those most affected by the loss of Libyan crude exports -- had time to source replacement supplies.

“Despite the onset of the low seasonal demand period, recent disruptions may create some anxiety in the market, providing grounds for increased speculative activity,” OPEC said in its report.

“Considering the availability of product stocks, refiners should have enough time over the maintenance season to adapt to any new requirements.”

Brent crude fell below $113 on Friday as a massive earthquake rocked Japan , creating a 10-metre tsunami and shutting down dozens of plants in the world’s third-largest oil consumer.

OPEC ministers and officials have said that the group does not need to hold an emergency meeting because supply is ample. Its next scheduled meeting is in June.

INFLUENCE OF SPECULATORS

The producer group often blames speculators, rather than a lack of oil, for boosting prices, and OPEC said there had been increased money flows into the market.

Analysts said the report showed no sign of a shift in OPEC ‘s views.

“The message hasn’t changed -- it remains unclear how much extra oil they will end up putting on the market,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas.

“ OPEC prefers to point a finger at speculation for volatility, failing to recognise the heightened degree of risk aversion relative to current developments.”

The report said that with OPEC pumping 30 million bpd, global oil stocks will rise by around 1 million bpd in the first half of this year.

It expects demand for its OPEC crude to dip to 28.7 million bpd in the second quarter as the end of the northern hemisphere winter reduces heating needs -- lower than the annual average demand for OPEC crude of 29.8 million bpd.

In the report, OPEC also said it was ready to take any further action, reiterating that it was able to add close to 6 million bpd to the market if needed.

“ OPEC continues to closely monitor oil market developments and stands ready to act, as deemed necessary, to support market stability,” it said. The production figures in OPEC ‘s monthly report are based on secondary sources including consultants and news agencies and are the closest thing OPEC provides to an official estimate of its output.

Many OPEC countries do not disclose their production on a timely basis.