OPEC can live with oil prices of $50-$60 a barrel for the rest of 2009, a source close to the organisation's Angolan presidency said on Tuesday.
The comments fit with an emerging consensus in OPEC that it will accept lower prices than it would like to help nurse the global economy back to health and mark a retreat from OPEC President Jose Botelho de Vasconcelos' remarks in March that oil could reach $75 a barrel this year.
They also imply Angola is unlikely to argue for an output cut when the group next meets on May 28.
"The current oil price is not ideal but we can live with it. Taking into account the current economic crisis, OPEC will be comfortable with a price of $50 to $60 per barrel until the end of the year," the source told Reuters.
"We don't expect prices to reach $75 per barrel this year under the current economic climate."
At its meeting in March, the Organization of the Petroleum Exporting Countries agreed to keep existing output targets intact, although inventory levels were already high and producers have repeatedly said current prices of around $50 a barrel are not enough to sustain investment.
Soon after the meeting, the OPEC president, who is also Angola's oil minister, said he hoped oil would reach up to $75 this year — the level many in OPEC say is needed to encourage spending on new production.
"The trend in oil prices is positive. We hope that this trend continues until we reach $70 to $75 per barrel (this year)," he told journalists.
PURSUING ECONOMIC HEALTH
With the focus on rebuilding a damaged global economy, many in the group have lowered their price expectations.
OPEC Secretary General Abdullah al-Badri said in Paris last week the group might be able to live with oil around $50 for the rest of this year.
Although OPEC's March meeting did not lower output targets below existing accords to reduce production by 4.2 million barrels per day (bpd) from September, it said it would improve compliance and reconvene on May 28 to reassess the market.
Discipline was then estimated at roughly 80 percent and has not changed significantly since, according to analysts polled by Reuters.
The Angolan source said members of the group were becoming stricter, but 100 percent compliance was not realistic.
"OPEC countries have complied with 79 percent of the cuts. This has enabled oil prices to recover from recent lows. We think compliance will be higher when we meet in May but it will be very hard to get 100 percent compliance," the source said.
Angola pumped around 1.68 million bpd in March, compared with an implied target of 1.52 million bpd, according to the Reuters poll.
The Angolan source said its output goal, which has not been formally made public, was 1.656 million bpd, not 1.52.
"We have complied with 80 percent of the cuts and are working hard to reach full compliance," the source said.
