Opec says $100 won't trigger more oil

Opec wants to see an improvement in world oil market fundamentals before increasing oil output, even if prices go to $100 a barrel, the group's Secretary-General said on Thursday.

"If it goes to $100 due to speculation, Opec will not move," Abdullah Al Badri told reporters in Quito, Ecuador ahead of a meeting of oil ministers on Saturday, "Opec will not act unless something is wrong with the fundamentals."

US crude hit $90 a barrel earlier this week for the first time in two years as traders bet that a recovery in world economic growth led by emerging economies would fuel increased energy demand. It traded just over $88 on Thursday.

But inventories remain too high for Opec's liking at nearly 60 days of demand in the industrialized countries of the OECD.

"Opec is focused on inventory levels rather than a specific price point," said David Greely, head of energy research at Goldman Sachs in New York.

"When inventories fall back to more normal levels then that's when they'll bring the oil back - it's not a question of the price being at $90, $100 or even $110 for the group. Inventories are key." 

The Organization of Petroleum Exporting Countries (Opec) is widely expected to leave supply targets unchanged on Saturday.

"At this time we don't want to disturb the market," said Badri. "The market is in a real comfortable position."

For two years Opec has aimed to keep oil prices in a $70-$80 range that it said was fair for both producer and consumer nations and supportive for world economic growth.

With prices rising it appeared to change its mind in early November when Saudi Oil Minister Ali Al Naimi, the group's most influential voice, said that consumers could cope with a $70-$90 range.

That has left oil markets wondering what conditions OPEC require to open the taps.

"I find it a little curious that he would say that," said Jan Stuart, oil analyst at Macquarie, of Secretary-General Badri's comments.

"I think that what Saudi Arabia or Al Naimi flagged was that the comfort range runs from $75 to $90. Previously they were talking about $85, so I don't know how $100 doesn't matter."  

Libya thinks $100 crude is not far off.

"The price may reach $100 by the beginning of the (new) year," said the head of Libya's Opec delegation Shokri Ghanem.

Opec slashed oil supplies two years ago when global recession hit fuel demand and sent oil prices down from a record $147 to a $33-a-barrel low. It has not changed supply policy since.
 

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