Oil market ‘fairly well balanced': Saudi oil minister

Saudi Oil Minister Ali al-Nuaimi said the oil market was ‘fairly well balanced’ as he arrived here Tuesdsay, increasing speculation that OPEC states will maintain production at current levels.
'The market is fairly well balanced,' the influential minister told reporters. 'We have worked very hard since June's meeting to bring prices to where they are now. I think everything is in balance. Inventories are in a healthy position.'

The 13-nation Organisation of Petroleum Exporting Countries is to decide Tuesday on its latest policy, with no change expected to its quota of 29.67 million barrels per day (bpd).

In the run-up to the meeting, the biggest area of uncertainty had surrounded Saudi Arabia, the de facto leader of OPEC and the world's biggest crude producer.

As a close ally of the US, it is keener than most to keep oil prices down to appease Western consumers.

Comments so far from key members suggested a split on whether output should be reduced in the face of declining prices in recent months.

OPEC President and Algerian Energy Minister Chakib Khelil said on Monday that a cut in production by the group, which pumps 40 percent of world oil, would be discussed.

'Everybody agrees that we will have an oversupply problem of between half a million and one-and-a-half million (bpd) by early next year,' he said as he arrived in Vienna.

'Of course there is an oversupply,' Iranian Oil Minister Gholam Hossein Nozari said as he arrived, underlining Tehran's desire to see the organisation enforce its quota system.

Algeria, Iran, Venezuela and Libya raised fears of oversupply and suggested the need for a reduction in output, while Kuwait, the United Arab Emirates and Ecuador called for no change.

The comments from the Saudi minister suggested that he would opt to maintain the status quo.

Riyadh has been producing record amounts of oil, around 9.6 million barrels per day in July, when its normal quota is only 8.94.

At present, OPEC is believed to be producing about a million bpd more than its official ceiling of 29.67 million bpd, with Saudi Arabia accounting for most of the excess.

The stakes are entirely different from the last time OPEC met in March, when prices had broken through 100 dollars a barrel and were on a steep upwards trajectory.

This time, oil prices are on the way down approaching 100 dollars -- a level many members, above all the traditional price hawks of Iran and Venezuela, are keen to protect.

Ahead of the OPEC meeting -- and amid the mixed signals from the cartel's members over what they wanted -- world oil prices slipped in Asian trade Tuesday, dealers said.

New York's main contract, light sweet crude for October delivery dropped 55 cents to 105.79 US dollars a barrel at the close of floor trading Monday in the US.

Brent North Sea crude for October delivery fell 14 cents to 103.30 dollars.