Last Updated: Tue Nov 02, 2010 20:40 pm (KSA) 17:40 pm (GMT)

Oil market in "good shape" before OPEC meeting

OPEC has kept official output targets steady since it announced late last year a record cut of 4.2 million bpd
OPEC has kept official output targets steady since it announced late last year a record cut of 4.2 million bpd

The oil market is in good shape and both consumers and producers are happy with the current price, Saudi Arabia's oil minister Ali al-Naimi said on Tuesday.

"The market is in very good shape, very well supplied, the price is good for everybody, consumers and producers," Naimi said ahead of the meeting of the Organization of the Petroleum Exporting Countries.

When asked if he thought OPEC needed to cut output, Naimi said: "With the price ranging between $68 and $73, what else do you want? The price, everybody likes, consumers and producers."

 The market is in very good shape, very well supplied, the price is good for everybody, consumers and producers 
Saudi Oil Minister Ali al-Naimi

The producer group has kept official output targets steady since it announced late last year a record cut of 4.2 million barrels per day (bpd) from September 2008 production.

But as the market has recovered from a low of $32.40 in December -- its weakest in nearly five years -- to this year's peak of $75 hit in August, it has reduced levels of compliance with agreed curbs from a peak of 80 percent of agreed cuts to less than 70 percent.

Prices edged up above $68 a barrel on Tuesday ahead of the OPEC meeting a day later, which analysts say may see more rhetoric on compliance but no change in output targets.

Oil, which fell 6.5 percent last week, has been trading in a range between $65 and $75 a barrel since the start of August, with prices swinging on economic data as investors seek clues about the pace of recovery from the recession.

Asked if oil inventories were too high, Naimi said: "Yes, they are a little bit. But where the markets is, I think it is very stable and steady."

"So what transpires in this meeting remains to be seen, but everything is in good shape."

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