The oil market is “very stable and healthy” and the current is price “good for everybody,” Saudi Oil Minister Ali Al-Naimi said on arriving in Vienna Tuesday ahead of a meeting of OPEC. “The market is in very good shape: very well-supplied,” Naimi told reporters. “The price is good for everybody, consumer (and) producer,” hovering recently between $68 and $73 per barrel, he added. He reiterated the view of several fellow OPEC ministers that further cuts to oil production quotas were unlikely and said Wednesday night's meeting would seek to enforce compliance with existing cuts “as best we can.” Saudi Arabia is the top producer among the 12 members of the Organization of Petroleum Exporting Countries. OPEC, whose members pump 40 percent of the world's oil, agreed in late 2008 to remove a massive 4.2 million barrels of daily output from the market as it sought to prop up crumbling prices. OPEC official daily output quota has stood at 24.84 million barrels per day since January. A vicious global economic downturn has slammed demand for energy, dragging crude prices from record highs of above $147 in July 2008 to $32 in December. They have since recovered to around $70. Now ministers from OPEC, whose economies are highly dependent on oil exports, must steer a careful course, supporting prices but not alarming markets by trying to do so too aggressively. Analysts say most member countries are satisfied with prices in the range of $70 to $80, enough to fund investment in future production, despite calls from hawks such as Iran and Venezuela to push them higher. Al-Naimi said Tuesday that crude markets were “in good shape,” boosting expectations OPEC will use its meeting this week to stress compliance with output quotas instead of cutting production. His comments echoed by Kuwaiti Oil Minister Sheik Ahmed Al Abdullah Al Sabah, were the latest indications that the Organization of the Petroleum Exporting Countries is comfortable with the rebound in crude prices that came about after members announced in December a record 4.2 million barrel per day output cut from September 2008 levels. Since that meeting, prices have roughly doubled, and are holding between $68 and $71. Analysts have said they expect the group to hold fast at its current production level, which is just under 25 million barrels per day. “Everything is in good shape,” said Al-Naimi. Saudi Arabia has said a price of about $75 per barrel was fair for the market - a level that would encourage further investment in boosting global supplies while at the same time not straining a world economy struggling to come out from the worst global recession in decades. Kuwait's Al Sabah echoed the same sentiment. In an interview with Kuwait's official KUNA news agency, Al Sabah said he was “comfortable” with current prices, describing them as “acceptable” for both producers and consumers. The producer bloc that accounts for roughly 35 percent of the world's oil supply has left output unchanged so far this year as prices have continued to climb. October crude oil futures were up slightly over $69 per barrel in Asia on Tuesday, supported by regional stock markets. While prices have bounced back from earlier lows in the low-$30s, global crude inventories are still far higher than the 52 to 54 days of forward cover in the OECD nations that the group would like to see. OPEC members have, nevertheless, resisted further cuts. “In principle, they always want to have higher prices - but taking into account the weak economic situation, they're content,” said Johannes Benigni, chief analyst at Vienna's JBC Energy. Working in their favor is the narrowing of the discount between the first and second month's light sweet US crude oil futures contract on the New York Mercantile Exchange. That discount is down to about $0.50 per barrel, a difference that provides buyers with insufficient incentive to buy crude for storage. That discount had been far wider in months past, meaning that refiners would prefer to buy crude and store it instead of waiting and buying oil when they need it.
