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Organization of Petroleum Exporting Countries (OPEC)'s production-monitoring committee Tuesday recommended that the oil cartel should maintain existing output quotas and improve compliance when the 12-nation group meets later Wednesday for the third time this year, reports say.
"We need more compliance" with existing production targets, Kuwaiti Oil Minister Sheikh Ahmed al-Abdullah al-Sabah told reporters following an hour-long evening meeting of OPEC's Ministerial Monitoring Committee(MMC) to review data on OPEC oil supply and demand at the group's Vienna headquarters.
He said that the 11 OPEC members bound by quotas are currently complying with about 68 percent of their promised cutbacks, adding that "75 percent would be fine."
On what price level the group might consider a further supply reduction, he said current prices are "O.K." and that he doesn't foresee any supply cut or a cutback in the near future even though the market is "oversupplied."
Oil Minister Ali al-Naimi of Saudi Arabia, who represents OPEC's biggest and most influential producer, said his country was currently producing about eight million barrels a day and complying with OPEC's cuts "as best we can."
He also said that the global crude market is in "good shape" and "very well supplied." The price is good for everybody, consumers, producers, Al-Naimi said as he arrived in Vienna.
The MMC, comprising representatives from Iran, Nigeria and Kuwait, recommended no change in quotas when it met before OPEC's May meeting. It often recommends a course of action for the full meeting of OPEC ministers, which convenes in Vienna later Wednesday.
OPEC left quotas unchanged at the two previous meetings in March and May after the oil cartel agreed late last year to cut production targets by 4.2 million barrels a day, the biggest cutback in the group's history, when prices crashed more than $100 a barrel from a record of $147.27 in July 2008.
Indications are that OPEC is likely to maintain its official output target after Saudi Arabia, the world's top oil exporter, told two major customers in Asia that it would keep crude oil supplies mostly steady in October. Many OPEC ministers have already said the group is likely to make no change to the official output target.
OPEC members are pinning their hopes on recovering global economic growth, stronger winter demand and existing curbs to help sustain prices near their $75 a barrel goal despite worries over a possible price crash as markets head into the weaker autumn demand period with bloated global inventories, both onshore and off.
Meanwhile, investors will be keenly awaiting the U.S. inventory data, delayed by a day this week due to a holiday on Monday. Analysts expect the data to show a decrease in U.S. crude inventories of 1.5 million barrels. U.S. crude inventories are 13 percent above year-earlier levels, at 343.4 million barrels, according to the Energy Department.
The American Petroleum Institute (API), an industry group, will release its inventory report later on Wednesday, while the U.S. Energy Information Administration, a government organization, will release its own data on Thursday.
Russia Ramps Up Oil Exports
Exploiting OPEC production cuts to gain market share, Russia has surpassed Saudi Arabia in oil exports for the first time since the Soviet Union's collapse.
Russian crude oil and refined products exports rose to 7.4 million barrels a day in the second quarter, from 7.25 million in the first quarter, according to country's Energy Ministry data. On the other hand, Saudi shipments fell to about 7 million barrels a day, from 7.39 million, according to International Energy Agency (IEA) estimates of output and domestic demand.
Russia's crude oil production climbed 1.3 percent in August from the same month last year, to 9.97 million barrels a day, and exports expanded 5.9 percent, according to the Energy Ministry data.
The increase came after the largest producer, Rosneft, began pumping from its new Vankor field in Siberia. The extra Russian output may undermine OPEC efforts to reduce inventories and keep members from exceeding their quotas after the group's meeting scheduled for Wednesday in Vienna.
Ahead of Wednesday's OPEC meet, NYMEX crude for October delivery was down 8 cents at $71.02 a barrel by 0057 GMT, after settling up $3.08 on Tuesday, as weakness in the U.S. dollar sparked inflation fears and triggered a buying rush. Oil rallied from a low of $32.70 in January to a peak of $75 a barrel on August 25.
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