OPEC not likely to cut output at Vienna meeting

VIENNA — With oil prices about where OPEC wants them and a modest economic upturn in the offing, the oil cartel isn't likely to tighten the taps when its leaders meet this week in Vienna.

Prices have been hovering near $70 a barrel, and with returning growth expected to support demand, analysts don't expect the Organization of Petroleum Exporting Countries will feel any need to cut output targets.

"Absolutely nothing," said John Hall, of John Hall Associates in London.

OPEC President Jose Botelho de Vasconcelos, who is also Angola's oil minister, said last week that signs of recovery suggest the 12-member group won't need to intervene. "Everything shows they will keep output unchanged," he said.

Kuwait also says it thinks oil prices are stable and there's no need to cut production, even though stockpiles are rising. And Algeria, Kuwait, Libya, Qatar and the United Arab Emirates have signaled they're happy with the current output quota of just under 25 million barrels a day.

Saudi Arabia, OPEC's No. 1 producer and most influential member, has said $75 a barrel is a fair price for both consumers and producers — a level that would allow for continued investments in the oil sector without undermining efforts at global economic recovery.

"Unless Saudi says, 'We're going to cut by a million barrels a day,' nothing's going to happen" at Wednesday's meeting, Hall said.

Benchmark crude for October delivery crested $68 a barrel Friday in electronic trading on the New York Mercantile Exchange. Over the past six weeks, it has fluctuated in the $65-$75 range amid conflicting signs of economic recovery.

OPEC meets more than a third of the world's annual oil demand, which the International Energy Agency has put at nearly 86 million barrels a day for 2008 — about 2.5 million barrels more than for recession-ridden 2009.

The economic downturn has taken such a big bite out of demand for OPEC crude, it will take four more years just to recover to 2008 levels, the cartel predicts in its latest outlook.

Still, stockpiles abound despite recent OPEC production cuts: The U.S. Energy Department said last month that U.S. crude stocks rose by 200,000 barrels for the week ended Aug. 21.

"We're swimming in this stuff," said Stephen T. Schork, president of The Schork Group in Villanova, Pa., and editor of a newsletter tracking industry trends.