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. Last Updated: 07/27/2016

OPEC Will Maintain Crude Output

VIENNA -- OPEC met Monday against the backdrop of a $13 fall in the oil price since mid-July, but ministers said they were unlikely to tamper with output ahead of peak winter demand and with looming worries over supply.

For a year, OPEC has been pumping close to its fastest rate for 25 years to guard against price shocks and ease pressure on consumer economies. Prices have sunk from a record $78.40 per barrel on July 14 to a five-month low below $66 on Monday.

At the meeting, OPEC was to consider a recommendation from its advisory committee that it keep its 28 million barrels-per-day production ceiling, for now, but leave the door open to another meeting before December if prices drop sharply.

Saudi Oil Minister Ali al-Naimi, OPEC's most influential voice, took the recent price fall in his stride.

"Market fundamentals are very sound," he told reporters as the meeting began. "We are beginning to see a slight decrease in economic growth, very slight ... nothing alarming."

Forecasts that demand for OPEC oil will decline in 2007 are worrying some in the group that pumps one-third of the world's crude. Some ministers, including OPEC President Edmund Daukoru, have said OPEC may have to cut its output ceiling before the end of the year.

"We have been oversupplying since about mid-2003, " Daukoru, also Nigeria's energy minister, said Sunday. OPEC ministers will take a critical look at the supply-demand situation, he told reporters Monday.

Gary Ross, CEO at PIRA Energy consultancy in New York, said OPEC was taking a sensible line.

"They are expressing a prudent view that they have to be vigilant and on top of their game. They don't want to see prices under tremendous downward pressure."

OPEC sees no need to cut production yet -- oil is still up $5 this year and three times the price at the start of 2002, the beginning of a 4 1/2-year rally.

Ministers are mindful that the Atlantic hurricane season still has several weeks to run and U.S. Gulf of Mexico oil output has yet to recover fully from last year's storms.

Iran's disagreement with the United Nations Security Council over its uranium enrichment program also has the potential to drive prices higher. The United States favors sanctions against the world's fourth-biggest oil exporter.

One-quarter of Nigeria's oil output lies idle because of militant attacks and Iraq's exports are vulnerable to sabotage.

"This business is very tricky. When prices come down, investors start thinking, should we build additional capacity? This business is a long-term investment business, so don't think these blips are significant. Look at it long term," Naimi said.

Iranian Oil Minister Kazem Vaziri said he wanted to see OPEC's basket of crudes holding above $60 per barrel, which would be equivalent to U.S. crude above $64.

Surging oil prices boosted the value of OPEC's crude oil exports by 45 percent to a record $513 billion last year.

But there are signs that economic activity is easing in the United States, the top consumer, and the second-biggest consumer, China, has raised lending rates to try to cool its economy.

OPEC's economists are forecasting demand for OPEC oil will drop 800,000 barrels per day, to an average 28.3 million barrels per day, in 2007 as new non-OPEC production comes onstream.