LONDON, May 23: The Organization of Petroleum Exporting Countries (Opec) must resist temptation to cut output and instead allow crude stocks to build further, the Centre for Global Energy Studies (CGES) said in its monthly report published on Monday. “Opec’s resolve is now being tested as consumer-held oil stocks increase, with some members starting to baulk at lower prices and calling for output cuts,” the CGES said.

The oil cartel’s output meeting in Vienna on June 15 “will be the real mark of Opec’s intentions and will show whether it is serious about allowing stocks to rise further, or whether Opec is targeting as high a price as it can get away with without provoking a response from customers.”

“Stocks must be allowed to build up over the second and third quarters to allow peak winter demand to be met,” according to the widely-respected CGES report.

“The stocks are needed

as a cushion against higher demand during the coming (northern hemisphere) winter by an oil industry that has seen spare capacity, both upstream and downstream, eroded by global oil demand and insufficient investment in new oil production, transportation and refining capacity.” —AFP