Cooperation central to stability as Ministers meet

OPEC Bulletin Commentary May 2013

OPEC's Oil/Energy Ministers will gather in Vienna on May 31 for the 163rd Meeting of the Conference. They will review the state of the oil market and the world economy since their last meeting on December 12, as they assess the outlook for the rest of this year and beyond.

They will notice a downward price trend since the winter, as well as continued volatility. Indeed, OPEC's Reference Basket price fell for the second month in a row in April, and, when this issue of the OPEC Bulletin went to press, it was $99.15/barrel.

Why is there this present price weakness?

The latest OPEC Monthly Oil Market Report, released three weeks ago, put it as follows: "Several key factors continue to pressure crude oil prices, including weak economic data from the world's two largest oil consumers, the United States and China, which necessitated a cut in this year's oil demand forecasts by major energy agencies. Additionally, ongoing Euro-zone economic turmoil and record levels of US crude oil inventories have contributed greatly to the downturn in crude oil prices." It added that speculative activity had magnified the bearish sentiment, adding to the price weakness.

Undoubtedly, these are difficult times for the market. But what is certain - and, in fact, commendable - is that OPEC's commitment to order and stability in the international oil market will guide their deliberations and eventual decisions. This commitment remains as strong today as it was when the Organization was created more than half a century ago in 1960.

In examining the outlook for the market, what will be uppermost in the minds of OPEC's Ministers is the need to ensure stable prices at fair and reasonable levels in the second half of the year.

They have been well briefed for the occasion by a series of internal meetings over the past month involving, in particular, OPEC's Board of Governors and Economic Commission Board and backed up by insightful reports and analyses prepared by the Secretariat.

The Ministers' deliberations will be carried out in the interests of all parties in the industry, as well as in support of steady growth in the world economy.

However, the concluding message from the Conference will be the familiar one that, for all parties to benefit from price stability, they must all contribute to it in whatever way they can. This includes not just OPEC's Member Countries, but also non-OPEC producers, consumers, the international oil companies and the financial institutions. We all have a part to play if we wish to enjoy the fruits of an orderly, stable oil market.

Most importantly, the cement that binds all this together is dialogue and cooperation, and this again is applicable to all parties. OPEC has always been a strong advocate of this, in the knowledge that this is essential to achieving our goals in the oil market.

OPEC Bulletin May 2013

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