Thanks to strong demand, a global economy that continues to show strength, limited increases in supplies from producers like Russia and Kazakhstan, and repeated interruptions in production from the Gulf of Mexico, members of the Organization of the Petroleum Exporting Countries have gone through 2005 with what has been, to them, a perfect alignment of stars: high prices along with high production and high demand.
With prices still holding near $60 a barrel and winter demand in full swing, OPEC ministers will meet Monday in Kuwait City for what increasingly looks like a purely formal gathering. For the time being, the group is likely to stick to its current policy of pumping at full tilt.
But after having avoided divisive issues for the last year, OPEC is likely to face a much different picture next year. Analysts said the group might have to consider production cuts, as non-OPEC producers increase their own supplies, if it wants to stop prices from falling too low.
One issue that may be discussed privately during Monday's closed session is the largest unresolved question for OPEC today: What is the minimum price that the group will choose to defend?
"There is an increasing challenge for OPEC next year," said Craig Pennington, the director of the global energy group at Schroders in London. "If you look at what people expected last year, non-OPEC supplies have disappointed and demand has been stronger. The result has been in OPEC's favor. But next year will be tougher. And they will not want prices to drop below $50 a barrel. They will need to cut production."
Over the last three months, OPEC oil ministers have watched with concern as oil prices dropped by about $15 a barrel from their high of $69.81 the day after Hurricane Katrina hit the Gulf Coast. Prices touched a low of $55 three weeks ago, before rebounding as cold weather set in on the East Coast.
Yesterday, crude oil futures on the New York Mercantile Exchange settled at $60.66 a barrel.
But the price of the "OPEC barrel" - a composite of 11 crude oils representative of the organization's actual production that OPEC looks at when considering its policy - has already fallen below $50. Since then, the price has recovered a little and was at $52.88 a barrel on Wednesday.
That has given OPEC ministers a little breathing room for the rest of the year, according to analysts at Barclays Capital in London.
"It looked as if ministers might need to enter the Kuwait meeting thinking fairly explicitly in terms of laying out the first sandbags for later price defense," the analysts, Paul Horsnell and Kevin Norrish, wrote in a note this week. "Perhaps now some of the urgency has been taken away. However, a one-week rally most definitely does not mean the questions on policy and targets have gone away."
Many delegates, including the representatives from Saudi Arabia, Kuwait, Iran and the United Arab Emirates, have said that the group is unlikely to announce cuts in actual production at next week's meeting. Some, however, have raised concerns that OPEC, which accounts for a third of world production, is pumping more oil than the market needs.
Yesterday, Kuwait's state news agency quoted Abdullah bin Hamad al-Attiyah, the energy minister from Qatar, as saying, "There is no crisis in the oil supply and the international market has witnessed an excess of oil, a matter which led to an evident drop in oil prices in comparison to the previous period."
Some of the group's members have already started to talk publicly about what they would consider a good price, by which they mean a price floor. One thing is certain: the previous price band of $22 to $28 a barrel, which was abandoned in January, is now extinct. No new target has been set since, though the energy minister of Venezuela, Rafael Ramírez, said yesterday that he would propose that one be adopted.
Referring to the types of oil traded in London and New York, Edmund Daukoru, the oil minister from Nigeria, told reporters in Vienna on Dec. 1, "Mid- $50's for Brent or West Texas would seem like a reasonable level; it would be ideal, appropriate."