RIYADH, Dec 8: Focus kept shifting from the Conference Palace in Riyadh to the polling stations of Caracas, and from Doha Sheraton to finally the Emirates Palace in Abu Dhabi.

However, by the time Opec ministers finally sat down to deliberate their next move on the global energy chess board, the writing was very much on the wall. With prices swinging wildly, tumbling by almost 10 per cent in about a week, and markets staying well within $100-mark, Opec had little option.

And thus despite mounting pressure and calls to lift output, signals indicating the course of action the oil cartel was to adopt in Abu Dhabi had started to emerge even before the final die was cast.

The group opted to leave its output unchanged at 27.253 million bpd “for the time being,” because the world was “well supplied” and crude reserves at comfortable levels.

The decision was, however, neither easy nor swift. There was definite heat inside the meeting room. A lot of labour had been put behind the scenes, away from the main meeting hall and away from the media frenzy, enabling the cartel to reach a consensus decision on the crucial issue.

But in the ultimate analysis, Opec ministers, decided to tread carefully – remembering the disastrous fallout from their decision to raise output just before the 1997 Asian financial crisis, only to see prices plummet from $20 to $12 a barrel then.

Reduced demand growth forecasts from both Opec and the International Energy Agency had softened markets. Also, the half-a-million barrel Opec production hike from November appeared starting to kick in, while the UAE was to get back to normal output levels after the regular maintenance shutdown of its refining infra-structure.

Opec also appeared concerned that any increase in production could oversupply the market during the second quarter, when demand for crude tends to fall as winter subsides in the northern hemisphere. At the back of their mind was also the fact that any major global economic meltdown consequent to the US housing crisis and credit crunch could dampen the global demand for energy.

Over the years, Opec seems to have mastered the art of keeping the pundits at bay confounding the markets until it makes its calculated move. Even days ahead of the group’s last meeting on September 11, most pundits were of the opinion that the cartel would avoid raising production. But the cartel surprised by agreeing to boost its output by 500,000 bpd from Nov 1.

Abu Dhabi meeting was no exception too. Contrasting and conflicting signals, amid fluctuating market, kept every one guessing until the end. Only up to a few days prior to the Abu Dhabi moot, markets were overwhelmingly betting that Opec would opt to increase the output. Comments from Opec members had boosted such speculations, with ministers from Iraq, Indonesia, Nigeria and Kuwait then insisting they were open to increases. There was speculation that a hike of up to 750,000 barrels a day could be on cards.

But then the mood started to swing and swing rapidly. Opec President and the UAE Oil Minister Mohamed Al Hamli reaffirmed last Tuesday there was ample oil supply, stressing “fluctuation in prices was the result of several factors that don’t have anything to do with market fundamentals.” Ministers from Venezuela and Qatar also started to suggest and emphasise there was no need to boost supplies.

Prior to the meeting, Opec’s production watchdog committee also came out with the recommendation that the group needed to maintain its current production levels.

The Saudi Minister for Petroleum and Mineral Resources, Ali al-Nuaimi, the veteran industry heavyweight, remained tight lipped on the issue until the meeting morning, stressing, “all options were open.” But then in the opening session, before getting into the closed door deliberations, he underlined, “there is nothing that justifies an increase or a decrease (in output).” The die was definitely cast!

Crude market dynamics are typical. They behave in erratic and wild manner. A week at times tend to be a big window, as far as market sentiments are concerned. This time also it was no different.

And indeed what a dramatic transformation literally over a few days!