OPEC hopes for oil price cut

By Fu Jing (China Daily)
Updated: 2007-11-17 09:57

Riyadh - The Organization of Petroleum Exporting Countries (OPEC) hopes that oil prices will fall despite coming close to the symbolic mark of $100 per barrel mainly due to high winter demand.

OPEC Research Director Hasan Qabazard told China Daily on Friday that the demand-supply fundamentals of oil remain unchanged and oil prices should drop.

"Our spare production capacity is still strong, and supply has been basically met," said Qabazard prior to the third OPEC summit in its 47-year history. "But the price drop is only my hope, instead of the forecast."

The summit is held at the weekend. The organizer said the oil price is not high on its agenda, and its members are to issue a joint declaration on Sunday.

Qabazard's hope came after former OPEC Secretary-General Subroto said on Thursday that oil prices would inevitably surpass $100 due to higher demand during the winter months and the weakening dollar. But he questioned the sustainability of prices at this mark.

After hitting a record of $98.62 a barrel last week, crude prices have been volatile over the past week, falling more than $3 on Tuesday and rising again by more than $2 on Wednesday.

OPEC Secretary General Abdalla Salem El-Badri was quoted as saying in a report that OPEC was ready to increase oil production "if that will help lower the price".

But due in part to the effect high prices are having on demand, OPEC reduced its forecast for fourth-quarter demand for oil, saying it would rise 1.97 percent, down from expectations of a 2.1 percent increase a month ago.

Industry analysts maintained that the current price spike has been mainly driven by speculation, and OPEC will not increase its production to decrease prices.

"The high oil prices, mainly driven by the financial market, are harmful for the world economy," said Pierre Terzian, head of Petro Strategies, a Paris-based consulting company.

OPEC currently meets 40 percent of global oil consumption with 80 percent of the world's reserves. It promised to increase its production to 90 million barrels per day by 2030 as it predicted a 40 percent growth in demand for oil by then.

But the OPEC chief stressed that the members of the organization will not use petroleum as a political weapon.

"We do not aim to use this additional capability or our present capability as a political weapon against any other countries," said El-Badri.

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