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OPEC Likely to Deny Bush's Request for More Oil, Survey Shows

By Grant Smith and Mark Shenk

Jan. 29 (Bloomberg) -- OPEC, the producer of more than 40 percent of the world's oil, may reject U.S. President George W. Bush's request to increase production and relieve the strain of rising energy costs.

The Organization of Petroleum Exporting Countries will keep its output target unchanged at 29.67 million barrels a day when it meets in Vienna on Feb. 1, according to 29 of 32 analysts surveyed between Jan. 24 and 28 by Bloomberg News. Ministers from Qatar, the United Arab Emirates and Iraq said last week that more oil isn't needed. Bush asked producers to pump more crude during a visit to Saudi Arabia on Jan. 15.

Oil fell 5.3 percent to $90.90 a barrel this month, and the 13-nation group wants to prevent a further decline, the analysts said. A slowdown in the U.S., the world's biggest energy consumer, risks curbing demand for fuel as the end of winter in the Northern Hemisphere reduces consumption.

``OPEC would be shooting themselves in the foot if they increased supply,'' Michael Davies, head of research at Sucden (U.K.) Ltd. in London, said in an interview.

Goldman Sachs Group Inc. and Merrill Lynch & Co. predict deteriorating growth in the U.S. will spread to other nations. Japan, the world's third-largest oil consumer, has probably entered a recession already, Goldman's chief Japan economist, Tetsufumi Yamakawa, said yesterday in a report.

The U.S. dollar, used by OPEC to price oil sales, weakened 12 percent against the euro during the past year, eroding OPEC's purchasing power. Oil reached a record $100.09 a barrel on Jan. 3 in New York.

Don't Need More

There's ``no need for additional barrels,'' Hossein Kazempour Ardebili, the OPEC governor for Iran, OPEC's second- largest producer, said in a telephone interview yesterday from Tehran.

Oil ministers from Qatar and the U.A.E. said Jan. 24 in Davos, Switzerland, that the market is ``well balanced.'' ``I don't see the need for more'' OPEC oil, Qatar's Abdullah bin Hamad al-Attiyah, said in an interview.

Bush said during a tour of the Middle East this month that more oil from the group would be a ``help.'' OPEC rejected a similar request from U.S. Energy Secretary Samuel Bodman when it kept production unchanged on Dec. 5 as prices closed in on $100 a barrel.

Analysts failed to forecast OPEC moves in the past. The group's last decision to boost output, on Sept. 11, surprised all 23 strategists surveyed before the gathering. This month, contrarians include two analysts that predicted an increase of between 250,000 and 500,000 barrels a day.

Seasonal Slowdown

``There's a 60 percent chance they'll increase production as the U.S. is putting pressure on Saudi Arabia,'' Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterriech in Vienna, said in an interview. ``If OPEC does increase, prices could come down into the $80s.''

Johannes Benigni, managing director of PVM Oil Associates in Vienna, said he expects OPEC to lower oil production at a scheduled March 5 meeting.

``OPEC is happy with the price above $80, and they clearly want to stop it going below $80,'' he said in an interview.

Oil use typically wanes as temperatures warm in Japan, Europe and the U.S., reducing the need for heating fuels. OPEC forecasts demand for its oil will decline by 1.45 million barrels a day in the second quarter because of seasonal refinery maintenance and shutdowns.

The group hasn't announced an output increase in January or February since 2003, when members had to make up for production lost during a strike in Venezuela.

``Global oil demand forecasts may slip as the effects of the financial crisis are reflected in consumer spending and commercial oil use,'' Deutsche Bank AG's New York-based chief energy economist, Adam Sieminski, said in a Jan. 25 report.

To contact the reporter on this story: Grant Smith in London at