OPEC: Fair Oil Price $60-$65

OPEC: Fair Oil Price $60-$65/Bbl; No Need to Up Output
by Ayesha Daya, Dow Jones Newswires
FWN Financial News 7/23/2007
URL: http://www.rigzone.com/news/article.asp?a_id=47988

The Organization of Petroleum Exporting Countries' head of research said Monday that a fair price for crude oil was between $60 and $65 a barrel, but said there was "no reason" for the group to raise output when it meets in September for its biannual gathering.

"I said in March that a fair price for oil was between $60 and $65. I still think this," Hasan Qabazard, OPEC's research director, told Dow Jones Newswires by phone.

He said he wasn't referring to any particular crude. "This is a range to account for the different crude qualities, not for one crude in particular," he said.

Oil prices have been climbing steadily this summer, touching 11-month highs of $76 a barrel last Thursday on falling gasoline stocks in the U.S. and strife in oil-producing Angola.

Crude fell slightly Monday on profit-taking by traders, with light crude on the New York Mercantile Exchange trading down 40 cents at $75.39 a barrel Monday, but the current price is at least $10 a barrel more than what Qabazard sees as fair. Brent crude is trading at an even higher level at more than $77 a barrel.

There are no signs that OPEC will act to contain the rally by deciding, when it next meets, to bring more crude onto the market.

"Now the price is quite high," Qabazard said. "But it has a premium in it because of refinery bottlenecks, and speculative money coming into the market," he said.

In this context, there is "no reason" for OPEC to decide to raise output at their next meeting in September, Qabazard said.

"We still believe there is no reason to raise production, because there is enough crude in the market and no takers for the crude. It will only go into stocks," he said.

Copyright (c) 2007 Dow Jones & Company, Inc.