Brent oil price is now a whisker away from the psychological mark of $100 a barrel. But Organisation of the Petroleum Exporting Countries (OPEC) that accounts for an estimated 40% of the global oil production says that there is ample surplus oil in the market (6 million barrels per day of space capacity) and no reason to panic. OPEC secretary general Abdalla Salem-El-Badri in an interview to ET says that the weak dollar coupled with speculation is driving the current price rise. “There is enough oil in the market and the customers are not asking for more.”

Indicating no hurry to increase production he goes on to say, “We cannot act simply because of speculators” However, OPEC remains concerned about the pace of economic revival and the crisis brewing in some European countries.

Oil prices have breached the $90 mark and some say it may be soon at the $100 a barrel mark. This is despite the fact that there is ample spare capacity in the system. What is pushing oil prices?

Oil prices are currently higher than $90/b and we have seen increased volatility in the oil market in recent months. But prices have not been consistently at this level; nor do I expect them to remain so. It is only since the end of December 2010 that prices have risen so sharply. The average price for WTI crude last year was $79.42/b, while Brent averaged $79.60/b.

The fundamentals show that there is ample supply in the oil market. OPEC Member Countries are holding more than six million b/d of spare capacity. Stock levels, both on and offshore, are also very high and well above the five-year average. In fact, forward cover is now close to 60 days, while it is typically around 53 days for this time of year. Oil prices have recently been driven by technical matters such as events in Alaska and the North Sea. Also, the weak dollar and speculation have added to this, pushing oil prices higher, especially Brent.

We are concerned that the IEA is supplying the world’s media with unrealistic price assumptions and forecasts that will serve only to confuse matters and create unnecessary fear in the markets. This will only add to volatility in the oil market and destroy the stability that OPEC works so hard to support.

Do you think the $90 to $100 mark range is the new band and its time consumers can used to this?

The idea of a price band is not something that OPEC subscribes to. Rather, we pursue market stability so that the price of oil is fair. It needs to be high enough to encourage investment. So we can deliver more supplies to the consumers, while still supporting global economic growth.

This Organization is sometimes criticized for maintaining its current output policy when the price of oil increases rapidly. But I must stress the point: there is currently enough oil on the market and our customers are not asking for any more. We cannot act simply because of speculators.

I must also be very clear about another point. The global economic recovery is a priority for OPEC. This has been reflected in our policy decisions during recent years. The world should remain confident that we will always act should the market require it. We have demonstrated this time and again.

Source: http://economictimes.indiatimes.com/opinion/interviews/expecting-a-rise-in-oil-demand-abdalla-salem-el-badri-opec-secretaery-general/articleshow/7332222.cms