Seeking to cool market sentiment, the head of OPEC said the organization is concerned about stubbornly high prices that defy what he described as a well-supplied market and adequate crude stocks worldwide.
The statement by Sheik Ahmad Fahad al-Ahmad al-Sabah, OPEC's president and secretary-general, was issued on Sunday in a clear attempt to dampen speculative buying that last week briefly drove prices above US$55 a barrel before they settled in the still historically high lower US$50s.
More bullish oil was poured on the fire on Saturday, when Venezuelan President Hugo Chavez said OPEC countries could fix a price for crude in a range of US$40 to US$50 per barrel, adding that low petroleum prices were a thing of the past.
Meeting next week
At a crucial OPEC meeting in Iran on March 16, some analysts are expecting the cartel to cut production to boost oil prices, which have skyrocketed over the past year on supply worries.
Al Sabah, in contrast, suggested present prices were too high, considering market fundamentals.
"Increased investment in commodities by speculators has caused further sizable upward pressure on prices," said the statement, issued by OPEC headquarters in the Austrian capital.
Other factors accounting for the surge include the late cold snap in the Northern Hemisphere; unexpected outages downstream at wells and port facilities; expectations of continued strong demand, "and ongoing concerns about the slowdown in the pace of growth" by non-OPEC suppliers, he said.
"OPEC is committed to maintaining stability and ensuring that global markets remain well supplied at all times," al-Sabah said.
Spare capacity
When OPEC ministers meet next Wednesday in Isfahan, Iran, "we shall review the prevailing market outlook to ensure market stability at reasonable price," he said, adding that the organization's present spare capacity -- at 2 million barrels a day -- will reach a daily 3 million barrels by the year's end.
That comment seemed to be geared to counter concerns that there was little unused output capacity at a time of generally robust world economic growth.
Crude oil futures dipped slightly yesterday. On the New York Mercantile Exchange, light, sweet crude for April delivery fell US$0.14 to US$53.64 a barrel, midmorning in Asian electronic trading.
Analysts said global supply tightness is likely to persist through the year owing to economic expansion that so far seems only marginally slower than last year.
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