Oil markets are well supplied with inventories of crude oil and refined products over their five-year average, the Opec governor of the United Arab Emirates said on Sunday.
The weakness of the US dollar has amplified the rise in oil prices, which was partly due to speculation, Ali Al Yabhouni told an energy conference in Dubai.
"The market is sufficiently well-supplied and what proves my argument are inventories; they are over and above the five-year average for crude and refined products," he said.
"It is not only fundamentals that are driving prices. It is very complex and there are many different players contributing to oil price movements."
Yabhouni said producers decide their output policy based on oil market fundamentals, but cannot cater for the appetite of financial speculators.
"We are looking at supply of oil; we see demand and try to match it. Financial demand is something else," he said.
The Organization of Petroleum Exporting Countries (Opec) left its output steady at a meeting earlier this month despite calls from consuming countries for more oil to halt the record rally.
The weak dollar and rising cash flows from hedge funds helped send crude oil prices to a record high of $111.80 a barrel in mid-March. US crude closed at $105.62 on Friday.
Yabhouni said earlier this month Opec, supplier of more than a third of the world's oil, would not react to speculative oil price movements when market fundamentals were balanced.
Opec officials have long insisted factors beyond their control are fuelling oil's rally.
"One reason the price is high is the weakness of the dollar," said Yabhouni. "If you look at it in other currencies such as the yen and the euro oil is very affordable. So yes the price looks high in dollars but not in other currencies." (Reuters)
Oil supply sufficient: UAE