Opec to cut output by good amount in Algiers

High OECD oil stocks show the oil market is oversupplied and Opec will likely cut supplies when it meets later this month in Algeria, the organisation's secretary general said yesterday.

"The market is oversupplied because we are seeing stocks as very high, about 55 to 56 days," Abdullah al-Badri told reporters on the sidelines of an energy conference.

Asked about whether there would be a cut decision in Algeria, he said: "There will be action there ... It will be a good amount, a good quantity," without giving any specific amount. Opec held an informal meeting in Cairo on Saturday but deferred a decision on a new oil supply cut to its next policy-setting meeting due to take place in Algeria on December 17.

Delegates said most members, including Gulf producers led by Saudi Arabia, saw a requirement to slice another one to 1.5 million bpd.

But for that to happen, delegates said, Riyadh wants proof that all fellow members are meeting their part of existing curbs.

Oil stocks in the OECD rose to 56 days worth of forward demand last month - the top end of the five-year end norm for this time of the year - and have been a worry for Opec, which uses them as a key gauge of whether markets are oversupplied.

Asked what kind of stock levels Opec would like to see, Mr Badri said the organisation was aiming at 52 days.

"I think we are looking for 52 days. This is the average for the last five years," Mr Badri said.

Preliminary data showed OECD industry stocks rose about 51 million barrels in October to 2.7 billion barrels, according to the latest International Energy Agency (IEA) report.

OECD inventory levels have hovered at or above their seasonal norm for several months, although relative stock levels normally fall during the winter as heating fuel demand picks up.