OPEC oil producers are worried about oversupply during the second quarter but can afford to wait until a March meeting before cutting production, the group’s president said on Wednesday.
“I think all the numbers say that in the second quarter there will be oversupply in the market. Then maybe a further cut but I think we can delay it until the Isfahan meeting,” Kuwaiti Oil Minister Sheikh Ahmad al-Fahd al-Sabah told reporters.
“To continue with the same ceiling at this meeting will be a very positive signal to the market,” he said. OPEC meets on Sunday in Vienna and then on March 16 in Isfahan, Iran.
U.S. crude prices held near $49.50 a barrel on Wednesday — barely $6 below record highs hit in late October — after a weekend blizzard in the U.S. Northeast boosted demand for heating oil.
Ministers from Nigeria and Indonesia have said this week that the cartel could keep pumping at current levels as prices remain high and stocks are not building too fast.
The Organization of the Petroleum Exporting Countries is keen to avoid an excessive stockbuild that could lower prices during the second quarter when demand ebbs after the northern winter.
“I think there will be oversupply in the second quarter and I think we will have to cut some of our ceiling,” Kuwait’s Sheikh Ahmad said.
“We will cut our production directly and even cut the ceiling of 27,” he said.
OPEC has already agreed to cut 1 million barrels per day of supply from January 1 to bolster prices.
Despite the January 1 cut world supplies were still in excess of demand, the minister said.
“Now I think there is about 500,000 to one million barrels out there still excess,” he said.
The Kuwaiti minister said current projections suggested oversupply of between 1.5 million bpd and 2 million barrels per day in the second quarter.
