Oil Trades Near $74 as OPEC Is Set to Maintain Output Targets

By Alexander Kwiatkowski and Yee Kai Pin

Dec. 22 (Bloomberg) -- Crude oil traded little changed before the Organization of Petroleum Exporting Countries meets today in Angola, where the group is expected to maintain production targets.

Oil traded near $74 a barrel as Saudi Arabian Oil Minister Ali al-Naimi said the producer group, which pumps about 40 percent of the world’s oil, will leave output quotas unchanged. Distillate fuel inventories in the U.S., the world’s largest energy user, probably fell as colder weather moved across the country’s north, according to a Bloomberg News survey.

“The hope is of course that oil demand is strong,” Johannes Benigni, chief executive officer of JBC Energy GmbH in Vienna, said in an interview on Bloomberg Television. “With oil prices at $75, everyone is happy and no one really needs to touch the hot iron.”

Crude oil for February delivery was at $73.87, up 15 cents, in electronic trading on the New York Mercantile Exchange at 9:13 a.m. London time. The January contract expired yesterday at $72.47 a barrel.

Brent crude oil for February settlement traded at $73.10 a barrel, up 11 cents, on the London-based ICE Futures Europe exchange. Brent declined 76 cents yesterday.

Nymex crude prices have gained 66 percent this year as OPEC’s pledge in 2008 to reduce 4.2 million barrels a day of output took effect. The 12-member group left targets unchanged for a third time when it last gathered in September.

OPEC Consensus

There is a consensus among members to keep OPEC quotas unchanged, Algerian Energy Minister Chakib Khelil said today, before the formal meeting began, echoing similar statements from other OPEC officials yesterday.

“Quotas will continue as they are right now, there is no need to change,” al-Naimi said today in the Angolan capital Luanda. “The market sees $70 to $80 as a perfect price, an excellent price for the world.”

All the 36 analysts surveyed by Bloomberg News last week said they expected OPEC to maintain formal production limits. Collectively, the 11 members with quotas pump 6 percent more than their targets allow, according to Bloomberg estimates.

“Investors do not seem to be impressed by the OPEC get- together, with the result being a foregone conclusion that many oil ministers are not even bothering to show up,” Edward Meir, senior analyst with MF Global Ltd. in Connecticut, said in a report today. “We expect the ensuing price bias will be to the downside.”

U.S. distillate inventories, which include heating oil and diesel, probably dropped 2 million barrels in the week ended Dec. 18 from 164.4 million the previous week, according to the median of estimates from 12 analysts before an Energy Department report tomorrow. All of the survey respondents forecast a decrease.

Crude oil inventories probably declined 1.73 million barrels from 332.4 million, the survey showed., while gasoline stockpiles are expected to have climbed 1 million barrels from 217.2 million.

Prior to the Energy Department report, a similar weekly inventory snapshot will be published later today by the American Petroleum Institute.

To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net. Yee Kai Pin in Singapore at kyee13@bloomberg.net.