OPEC Resists Push on Oil Output

OPEC has kept oil supplies unchanged following its 147th annual meeting,debating the US financial crisis and its affect on future supply levels.

The decision to ignore US calls to up supply levels is based on the prediction of a crude inventory build for the first part of 2008, with the forecast in-line with seasonal trends, says OPEC.

"There is a balanced market, so there is no need to take action today," OPEC Secretary General Abdallah Salem El-badri announced at the meeting, adding that OPEC would not hesitate to increase or decrease production levels, should the market dictate it.

Debate at the meeting focused on tracking the US downturn until OPEC's next meeting on 5 March, where an output cut may be necessary to defend prices against a possible drop in demand.

When asked about the slowing US economy and possible recession, El-badri said the world would need to "wait and see" how the subprime crisis affects world markets.

He also predicts a US recession would not affect demand in countries such as India and China.

Analyst at Brewin Dolphin Investment Banking, David Macnair, says it is "no surprise that OPEC has kept supply levels as they are, at around US$90 a barrel" and believes the organisation may cut oil levels later this year if the US downturn continues and there is a fall in demand.

OPEC President Chakib Khelil says contributions from non-OPEC countries are able to meet any surplus demand, although OPEC says enough reserve stocks are available.

By Ozge Ibrahim