Oil market healthier, OPEC may hold fire

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Saudi Oil Minister Ali al-Naimi.

OPEC may not need to cut or raise output when it meets in a month's time if market conditions, which have improved significantly, remain as they are, Saudi Oil Minister Ali al-Naimi was quoted as saying on Monday.

"If you are asking me are we [OPEC] going to take additional cuts or increase supply, I do not know," Naimi, oil minister of the world's biggest exporter and the cartel's most powerful voice, told the Wall Street Journal in an interview.

"But most probably, if the trend is like what it is like today, with the market getting in much, much better health and balance, there may not be any reason to change."

Naimi was making his first direct comments on the market since prices rebounded to nearly $60 a barrel, from a 20-month low of $49.90 in mid-January.

He said the kingdom was producing about 8.5-8.6 million barrels per day (bpd), the paper reported.

That is down about 1 million bpd from six months ago. For January, ahead of a second OPEC cut that took effect on February 1st, a Reuters poll estimated its output at 8.73 million bpd.

Oil prices fell after the comments but later recouped some losses to stand 55 cents lower at $59.34 a barrel.

The Organisation of the Petroleum Exporting Countries (OPEC) has agreed two production cuts for a total of 1.7 million bpd over the past four months, aiming to stem a deep slide in prices by draining consumer nation inventories.

Those cuts, coupled with a blast of cold U.S. weather and a slight rise in geopolitical concerns, renewed investor demand and helped revive prices, although Naimi warned that things could yet change ahead of OPEC's March 15 meeting.

"I would not be surprised to see different figures and a different situation on the 15th of March," Naimi said.

Many analysts believe OPEC is aiming to sustain a price of around $55-$60 a barrel for U.S. crude, although neither Saudi Arabia nor the group as a whole has set a specific target.

The Wall Street Journal said Naimi hinted that he may want to retain his position after King Abdullah's first major cabinet reshuffle, expected as soon as next month.

"Ministers normally do not retire," said Naimi, who is near the end of a third four-year term. "Ministers are appointed by the king and relieved by the king, unless there is a serious medical reason, and as you can see, I am fairly fit and in good shape."

Naimi also said the kingdom was pressing ahead with its plan to increase total capacity to 12.5 million bpd by 2009, up from its current 11.3 million bpd.

"From what we see, the world will need what Saudi Arabia produces," he said.

"There is no question demand will be there in 2009."

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