PREVIEW-OPEC will not lift output to cap oil price rise

* $90 per barrel will not trigger more OPEC oil

* Emerging market economies growing despite oil price rise

* OPEC conditions for increase in output not yet clear

By Hugh Bronstein

QUITO, Dec 8 (BestGrowthStock) – OPEC appears unlikely to raise oil
supply limits to cap an oil price rally when it meets in Quito
on Saturday, with ministers insisting world economic growth can
hold up with crude at $90 a barrel.

OPEC ministers going into the Dec. 11 meeting in the
Ecuadorean capital have said that the world economy can handle
up to $90, increasing their previous range of prices considered
acceptable for consumers.

Saudi Oil Minister Ali al-Naimi flagged the change last
month, adding $10 to the top end of the $70-$80 ideal range
that Riyadh said it preferred over the past two years.

“A crude price of $90 is not yet a trigger to put more oil
into the market,” said New York-based John van Schaik at Medley
Global Advisors.

“OPEC will not fiddle with its official output targets at
this meeting,” he added. “It will continue tweaking its actual
output to balance the market, to see to it that supply meets

The 12-member Organization of the Petroleum Exporting
Countries has not officially changed production policy since
December 2008, when it reacted to a recession that had crushed
fuel demand by announcing its deepest-ever supply cuts.
Read what ministers have been saying lately: [ID:nN08179469]
For a selection of GRAPHICS related to OPEC see:
OECD days forward cover:
Global supply/demand forecasts:
Oil price forecasts:
Prices in different currencies:
For more OPEC news and analysis click on [O-OPEC]


“Everybody seems to be comfortable with these prices. $90
is not a magic number,” said David Kirsch, director of market
intelligence services at consultancy PFC Energy in Washington.

“OPEC has been generally pleased with economic growth and
oil demand,” he added. “They see higher prices as consistent
with macroeconomic conditions. Any adjustments that need to be
made to output can be made through minor tweaks and do not need
to be enshrined in a formal agreement, at least at this time.”

Even energy consumer watchdog the International Energy
Agency does not appear concerned that OPEC is letting oil
prices get out of hand.

The oil market will have plenty of supply if OPEC keeps
producing at current levels, International Energy Agency
Executive Director Nobuo Tanaka said on Monday.

With zero expectation of any change in policy, oil traders
will be looking for signals from ministers about the conditions
they consider necessary to trigger more supply in 2011.

“If oil prices start heading toward $100 per barrel, then
OPEC will be concerned,” said Fadel Gheit, a New York-based oil
industry analyst at Oppenheimer & Co.

“Once they lose control of oil prices on the way up they
will also lose control of oil prices on the way down. Basically
they would be conceding the price movement to speculators, and
that’s the last thing they want to see,” he said.

Oil slumped from a peak of $147 a barrel in mid-2008 to a
low under $33 in December of that year as the economic crisis
hit fuel demand and inventories soared. OPEC cut output sharply
and economic recovery this year has lifted demand.

As the cartel keeps a lid on production, world demand is
recovering faster than most forecasters expected. World oil
demand led by China may increase as much as 2 million barrels
daily this year to over 86 million bpd and restore global
consumption to pre-crash levels of 2007.

“With prices pushing $90 per barrel, no one seems to be
complaining or calling for higher OPEC production. The recent
rally in the dollar and high oil inventories that we are seeing
around the world are probably helping,” Gheit said.

At least five banks raised their mid- or long-term oil
price forecasts last week, citing factors such as rising demand
in emerging markets, faster global economic growth and OPEC’s
reluctance to boost output. [ID:nN03126214]

J.P. Morgan said on Friday oil would top $100 in the first
half of 2011 and $120 before the end of 2012, predicting OPEC
would be very slow to react to higher prices.
(Reporting by Hugh Bronstein; editing by Jim Marshall)

PREVIEW-OPEC will not lift output to cap oil price rise