OPEC Isn’t Comfortable With Oil Going Back to $100

By Grant Smith

Oct. 20 (Bloomberg) -- The Organization of Petroleum Exporting Countries isn’t comfortable with oil prices returning to $100 a barrel, said the group’s secretary-general, Abdalla El-Badri.

El-Badri said he doesn’t expect prices to reach three figures in the near future as there is “no shortage of oil supply.” The rally to a one-year high above $80 a barrel today is driven by higher equities, the sliding dollar and speculation, he told reporters today.

OPEC, responsible for about 40 percent of the world’s crude supply, next meets on Dec. 22 in Luanda, Angola. The group is concerned about the 125 million barrels of crude oil and fuel that remains in floating storage, El-Badri said, adding that it’s too early to say what should happen at the next summit.

“When we see that floating storage eliminated it means demand is coming,” El-Badri said in London, where he’s attending the Oil & Money conference. “We are seeing an $80 oil price that is a little bit high.”

Crude oil for November delivery rose as much as 44 cents, or 0.6 percent, to $80.05 a barrel in electronic trading on the New York Mercantile Exchange, the first time the front-month contract has traded above $80 since Oct. 14, 2008.

OPEC has 6 million to 7 million barrel of spare oil production capacity “that can be put into the market straight away,” El Badri said in a speech at the conference.

‘Upward Drift’

Crude demand is recovering slightly as the economy picks up, and oil prices are likely to remain in their current range “with a slight upward drift,” BP Plc Chief Economist Christof Ruehl said in an interview on Bloomberg Television today.

El-Badri said OPEC members should stick more closely to quotas. Compliance slipped to 62 percent in September, according to data given in OPEC’s last monthly report.

The group supports moves in the U.S. to place limits in the positions so-called speculators can take in oil markets, El- Badri said. “We hope this will be under control very soon.”

Seven of the 35 oil projects delayed in member countries after oil slumped last year have now been revived because of the rally in prices, he said, adding the group is working on 150 projects to boost spare capacity

The world needs more investment in oil production to meet future demand for energy, International Energy Agency Executive Director Nobuo Tanaka said at the conference. “We need oil,” he said.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net