24 May 2011 16:37 [Source: ICIS news]
LONDON (ICIS)--It is unlikely that OPEC will announce plans to increase its oil output despite increasing pressure to do so, an analyst with the Centre for Global Energy Studies (CGES) said on Tuesday.
Having failed to respond to the loss of 1.5 mbpd (million barrels per day) of output from ?xml:namespace>
“Why would OPEC members wish to ramp up production when there is risk of over-supplying the market and weakening oil prices?” he asked.
According to a Monthly Oil Report released by the CGES on Monday, few other member countries would be able to increase production to make up the aggregate OPEC shortfall of 1.4 mbpd between January and April 2011.
“Most of the burden, or opportunity, to raise production will fall on
With limited numbers of other OPEC members with the capability to raise their output significantly, the report also suggests it is doubtful they would be in a hurry to agree to an output hike in which they cannot partake.
“Most are likely to be reluctant to sacrifice their narrow short-term self-interest for the greater good, particularly as they have convinced themselves that all is well in the oil market and that the current level of oil prices is having no adverse effect on the global economic recovery,” it added.
In a research note published on Monday, Goldman Sachs raised their estimates for Brent crude oil futures to $115/bbl, $120/bbl, and $130/bbl on a three, six and 12-month horizon.
“We expect that the ongoing loss of Libyan production and disappointing non-OPEC production will continue to tighten the oil market to critically tight levels in early 2012,” the investment bank said.
“We are now embedding in our forecasts that Libyan production losses will lead to the effective exhaustion of OPEC spare capacity by early 2012.”
With fears over the negative impact of high oil prices on economic growth ever present, the International Energy Agency (IEA) urged OPEC to step up its output or face the threat of the release of strategic stockpiles of oil by western countries for the first time since 2005.
“We are prepared to consider using all tools that are at the disposal of IEA member countries,” the agency said in a statement released last week.
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