OPEC is not expected to change its policy on production levels when it meets in December, as global oil inventories remain well above the five-year average, an official from the group said on Tuesday.

“There is plenty of supply in the market so I don’t see why OPEC should
increase production at this stage,” Hasan M. Qabazard, director of
OPEC’s research division, told Reuters in an interview on the sidelines
of an oil conference.

“We still have a stock overhang which is well above the five-year average.”

Oil stocks in developed OECD countries are equal to 60.7 days of
demand, above the five-year average. More than 80 million barrels of
middle distillates fuels are also being stored on ships at sea,
according to Reuters estimates.

“There is very low demand especially for middle distillates, refinery
utilisation rates are very low, relative to last year and the year
before,” Qabazard said.

“In general for OECD countries we see that demand has been reduced quite substantially.”

The Organisation of the Petroleum Exporting Countries agreed to curb
its output by 4.2 million barrels per day (bpd) last year. It has kept
official policy unchanged at meetings this year.

On Saturday, the United Arab Emirates Oil Minister Mohammad Al Hamli
said that raising production was not currently on the agenda. Iran and
Venezuela have said OPEC does not need to increase production.

Some OPEC members had raised the possibility of an increase in supply at the December meeting due to the strong rally in prices.

Oil has rallied 77 percent so far this year, from a low of below $33 in
December, though it is still nearly 47 percent below a high of more
than $147 a barrel seen in July last year.

Oil demand in the United States was expected to see some growth next year, Qabazard said.

Source: Arabian Business

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