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OPEC unlikely to cut output: minister

OPEC is unlikely to cut output at its upcoming meeting, Saudi Arabia's oil minister said in comments published yesterday, as indications mounted that the oil producing bloc would resist a temptation to tighten the taps despite wanting higher crude prices.

The Saudi minister, Ali al-Naimi, also voiced concerns about global crude stockpiles, whose tenaciously high levels are being sustained by weak demand linked to the economic meltdown.

In an interview with the pan-Arab daily Al-Hayat ahead of tomorrow's OPEC meeting in Vienna, Austria, al-Naimi said that unless those inventories drop, there would be no increase in output by the 12-member Organization of the Petroleum Exporting Countries.

Boosting production "will not happen until we are sure that global inventories are reduced to their normal levels," said al-Naimi, whose country is the world's largest exporter of crude. He said world crude inventories are at between 61 days and 62 days of forward cover and the group wants to see it at 52 days or 54 days.

Al-Naimi's remarks highlight the balancing act the group, which pumps almost 40 percent of the world's oil, is facing.

The United States benchmark light sweet crude futures contract was trading slightly above US$61 a barrel yesterday, about US$20 a barrel more than its price when OPEC ministers met in March to discuss whether additional production cuts were needed.

They held off, opting instead to stick with boosting compliance with an earlier 4.2 million barrels a day in reductions from September 2008 levels. At this meeting, they appear likely to do the same, focusing on making sure group members adhere to quotas as a way to drive prices higher despite still weak demand.

In an interview published yesterday in Kuwait's Al-Seyassah daily, Saudi Arabia's King Abdullah said the kingdom believes "a fair price is US$75 or maybe US$80 per barrel, especially for the time being."

Producers and analysts have voiced concerns that current prices are discouraging new investments, meaning supply will not keep pace with demand going forward.

Al-Naimi repeated that warning in Rome, Italy, on Monday, saying oil prices could again spike even to above last year's record high of almost US$150 per barrel.


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