OPEC can live with $50 oil for 2009: Secretary General

By Ikuko Kao and Muriel Boselli
PARIS (Reuters) - OPEC may be able to live with oil prices around $50 a barrel in 2009, its Secretary General said on Thursday, another sign the group has limited its price aspirations for now because of the weak global economy.

The comments are the first indication from the Organization of the Petroleum Exporting Countries of how long it can withstand oil at $50, below the $70-$75 many in OPEC and the oil industry say is needed to encourage investment in new supply.

"We cannot really invest at current oil prices. Maybe we can live with it this year," Abdullah al-Badri told a conference in Paris. "The cost of adding new capacity is still high."

Badri added: "2009 is the most difficult year for the world to live."
While painful for producers, cheaper oil equates to a large economic stimulus for consumers and oil producers stand to benefit in that a stronger economy encourages demand for fuel.

When it met in March, OPEC decided against a new output reduction to bolster prices, saying it was waiting to see the outcome of a G20 summit -- taking place in London on Thursday -- that investors hope will deliver measures to restore growth.

PRAGMATIC
The oil minister of Qatar, who is also attending the Paris conference, made similar remarks to Badri's.
"I say the current price of $50 is more pragmatic related to the world economic crisis," Abdullah al-Attiyah said. "We cannot be dreamers."

Its members have delayed 35 projects to expand supply, Badri said in February.
At Thursday's Paris conference, Total CEO Christophe de Margerie said many oil companies were delaying big projects to preserve cash and his company might not meet its plan to invest $18 billion this year.

Opec agrees to keep oil output steady

Washington has said even a token supply increase from the Organisation of the Petroleum Exporting Countries would help to tame prices.

More.

NVDL: The US are getting desperate. With oil at $100 the US is taking a massive hit as the world's largest economy (and the most addicted to oil by far).

The OPEC Con

The reality is that output cannot be raised. World global supplies have been at maximum for some time, and we've seen a gradual downward slide in supply and capacity. Can you imagine the worldwide fallout (and catastrophe) were it to leak out that this was the case? That worldwide demand is now greater than supply (and this trend will worsen over time)?

The result will be runaway prices, or recession, or both.
Opec's saying they will raise output by November is a bit like a weatherman promising cooler temperatures in winter. It's likely to happen anyway (since the global demand curve for fuel is at its lowest in November).

From BBC.com:
Opec agrees to raise oil output

Opec controls more than a third of global oil suppliesOpec members have agreed to increase oil production by 500,000 barrels a day to meet concerns about rising demand.
The 12-nation oil producers' cartel agreed to support a proposal from influential member Saudi Arabia to raise daily production from 1 November.

Oil prices have been touching record highs on fears of a growing imbalance between supply and demand. But despite Opec's decision US light crude settled at a record closing price of $78.23, up 74 cents.