OPEC oil ministers are enjoying a winning streak, with the market well-supplied, prices high and production booming, but analysts warn they should tread carefully next year to keep the magic touch.
The 11-nation Organisation of the Petroleum Exporting Countries (OPEC) decided on Monday to keep oil production at a near 25-year-high but withdraw an emergency offer of spare capacity because it was no longer necessary.
The cartel also said it would meet again on January 31 in Vienna to assess an expected seasonal drop in demand for energy between April and September, with a possible cut in output on the cards.
The widely-anticipated decision on production, which came at the end of a one-day meeting in Kuwait City, had little impact on the oil markets, with traders and analysts focusing on the likely outcome of the Vienna reunion.
Several OPEC ministers, including Qatar's Energy Minister Abdullah bin Hamad al-Attiyah and his Libyan counterpart Fathi Hamed bin Shatwan, have indicated that a cut in production may be required to offset any slump in demand.
"In the second and third quarters, usually demand decreases, so we have to meet and discuss, and we're going to have a cut if it is necessary," bin Shatwan said after Monday's meeting.
OPEC members agreed to leave their official output quota of 28 million barrels per day (bpd) unchanged for the first three months of next year.
As a result, actual production will remain at some 30 million bpd when Iraq's contribution is included. The war-torn country has been excluded from the group's quota system since 1990.
Oil analysts, however, doubt this policy will last for long.
"The second quarter still poses a scare for OPEC because no one can predict what would be the demand for oil. That's why they decided to meet in January," said Kuwaiti analyst Kamel al-Harami.
"The problem is not today, but it could happen in the second quarter."
Harami expected oil prices to slide if demand declines in line with warmer weather in the industrialised northern hemisphere next year.
At the same time, a factor that may distort the traditional seasonal slump in energy requirements is the oil-guzzling economies such as China and India.
They pushed up demand over that period for the past two years, forcing OPEC to raise rather than cut production, said OPEC president and Kuwait's energy minister Sheikh Ahmad Fahd al-Sabah.
British analyst John Hall of John Hall Associates agreed that it was a difficult situation to forecast.
But he noted: "There has been a slight downturn in world economic growth simply because of the high price of oil.
"I would expect the consumption level to fall away in the spring and summer."
Too much oil in the market lowers prices, hitting OPEC members' vital revenue and affecting their ability to invest in infrastructure and increase capacity.
In response, the cartel typically trims back production to balance demand.
US analyst James Charbonnet, vice chairman of the Louisiana Oil and Gas Consortium, warned however that other factors were at play.
"I think what is happening is a lot of speculators in the market are keeping the price up artificially," he said, adding that insufficient refinery facilities in consumer countries was another problem.
For now, OPEC appears happy to maintain a level of production that keeps the price of oil in New York at around 60-dollars-per-barrel mark -- three times the value at the start of 2002.
Libya's Shatwan said he thought the very minimum price for oil should be 40 dollars per barrel, noting: "It is the red line for us."
The price of oil hit an all-time high of 70.85 dollars per barrel in New York on August 30 following Hurricane Katrina, which devastated refining and crude production facilities along the Gulf Coast of the United States.
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