The 13 percent decline in the Dollar Index since June has led some OPEC members to call for oil to rise to US$100 a barrel.
The US currency’s weakness means the “real price” of oil is about US$20 less than current levels, Venezuelan Energy and Oil Minister Rafael Ramirez said after an OPEC meeting on Thursday in Vienna.
The group, which accounts for 40 percent of global crude output, left targets unchanged and called for greater adherence to quotas, which are being exceeded by a supertanker a day.
Photo: EPA
“OPEC is not interested in compliance right now,” Nordine Ait-Laoussine, the former Algerian oil minister who now runs Geneva-based consultant Nalcosa SA, said in an interview in Vienna. “They’re concerned about the dollar because as the dollar weakens, prices go up. They’re not paying any attention to production discipline.”
The Dollar Index, which tracks the currency against those of six US trading partners, was at 76.52 at 7:16am in London yesterday, its lowest level since December, from this year’s high of 88.405 on June 7, bringing its decline in the past month to 6.1 percent. The nominal value of OPEC’s net oil export revenue will be US$818 billion next year, 10 percent more than this year, the US Energy Department forecasts.
OPEC is exceeding its own quotas as prices rise above the US$70 to US$80 a barrel band that Saudi Oil Minister Ali al-Naimi said was “ideal.” The International Energy Agency estimated that the group achieved 54 percent of its promised supply cuts last month.
Libya’s National Oil Corp chairman Shokri Ghanem said a higher crude price would help OPEC offset the loss of revenue from the weaker dollar.
“We would love to see US$100 a barrel,” Ghanem said in Vienna. “We’re losing real income. Libya in particular would like to see a higher oil price.”
Kuwaiti Oil Minister Sheikh Ahmad al-Abdullah al-Sabah said in an interview this week that US$70 to US$85 was the “most comfortable” range, while his Algerian counterpart, Youcef Yousfi, said between US$90 and US$100 was “reasonable.”
Crude for delivery next month rose US$0.18, or 0.2 percent, to US$82.87 a barrel in electronic trading on the New York Mercantile Exchange yesterday, paring Thursday’s 0.4 percent decline. Oil gained 9 percent in the past month.
Goldman Sachs Group on Thursday forecasts “substantially higher prices” for oil in the second half of next year and in 2012 as the global inventory surplus is exhausted.
“We believe that forward price levels offer good hedging opportunities for calendar 2011/2012 for consumers despite the recent rally,” Goldman analysts led by Allison Nathan and Jeffrey Currie said in a note to clients.
“We expect the supply-demand balance to continue to tighten in the fourth quarter of 2010 as continued global economic growth, albeit likely at a slower pace than in the first half, continues to strengthen demand,” the note said. “Moving into the second half of 2011 and 2012, we expect the global inventory surplus to be exhausted and OPEC spare capacity to be drawn on to balance the market, leading to substantially higher prices.”
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