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Sunday, January 30, 2005

Opec to keep oil output unchanged

Crude prices are up about 40% on last year but Opec ministers do not believe the world economy is being held back.
Production was raised last year after prices hit record levels amid supply disruptions and soaring demand from the US and China.
The quota-busting, however, was blamed by members for a subsequent retreat in crude prices.
In December, Opec cut production by 1 million barrels a day to bring output closer to its target level.
Target price suspended
In New York on Friday, a barrel of light crude fell $1.66 to $47.18, while in London, Brent crude was down $1.49 at $44.95.
Several Opec ministers have indicated that oil prices were too high to justify production cuts, despite concerns over a possible build in supplies during the seasonally weak second quarter of the year.
The weaker dollar has insulated many growing economies from a shock
Yasser Elguindi, Medley Global Advisers
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Opec said consultations may take place before the group's next meeting in March to coordinate a cut if needed.
They appear, however, to be prepared to defend current price levels.
"We think the high price will not effect the global economy," said Opec president and Kuwaiti Energy Minister, Sheikh Ahmad Fahd al-Sabah, said.
Analysts say the weakening of the US dollar has protected non-dollar importers from the rise in dollar-denominated oil prices.
"Oil prices are high but the US economy hasn't skipped a beat and the weaker dollar has insulated many growing economies from a shock," said Yasser Elguindi at Medley Global Advisers.
The 11-member group also agreed to suspend its target price band of $22 to $28 a barrel - a level set in 2000.
"We have to wait until the second quarter of this year to know exactly where the price indicator will head," said Sheikh Ahmad.