Source: OPEC won’t cut output above $37 a barrel

Crude oil futures would need to fall to about $37 a barrel before OPEC decides to cut production, according to a person familiar with the thinking of the cartel’s top officials.

That would set OPEC’s next trigger price a few dollars below the level its president had recently suggested.

Last week, the Organization of Petroleum Exporting Countries decided not to rein in production, as the price of light, sweet crude oil futures hovered near $47 a barrel. But the Vienna-based cartel left open the possibility of an output cut before its mid-March meeting. What remains to be seen is how far prices would have to fall before OPEC takes action.

At an informal meeting last week in Davos, Switzerland, where global financial leaders met for the annual World Economic Forum, several OPEC representatives signaled that the cartel would not reduce its official output unless prices fell by roughly $10 a barrel from levels at the time, according to a source who attended the meeting, speaking only on condition of anonymity.

“That’s my reading,” the source said.

Light sweet crude for March delivery rose 3 cents to $46.50 a barrel on the New York Mercantile Exchange. Brent crude rose 4 cents to $43.89 on the International Petroleum Exchange. Oil prices are roughly 40 percent higher than a year ago.

Those who participated in the informal meeting in Davos included: Sheik Ahmad Fahd al-Ahmad al-Sabah, Kuwait’s oil minister and the OPEC president; Ali Naimi, the Saudi Oil Minister; Adnan Shihab-Eldin, OPEC’s acting secretary general; Fatih Birol, chief economist of the International Energy Agency and Daniel Yergin, chairman of Cambridge Energy Research Associates.

Al-Sabah had told reporters at last week’s OPEC meeting that he considered $35 a barrel to be a “suitable price” for OPEC’s basket of crudes, which are trading roughly $6 lower than Nymex oil futures. OPEC suspended its official $22 to $28 a barrel price band on Jan. 30.