Oil prices too high, says Opec secretary-general

[Kevin]

Oil prices too high, says Opec secretary-general

A TOP official at oil cartel Opec said today that the world was probably running an excess of up to 200,000 barrels per day and that oil prices were too high.

Acting Opec secretary-general Adnan Shihab-Eldin said the balance between supply and demand this year justified a price below $50 a barrel. Current levels for US crude are running at about $52 which Mr Shihab-Eldin suggested was due to market speculation.

"We hope the fundamental factors - that supply is adequate and Opec will ensure it has the capacity to maintain adequate supplies - will bring prices to a level that is more reflective of fundamentals and we believe that is $40 to $50 for US crude," the oil boss said.

At an oil conference in Singapore, Mr Shihab-Eldin told delegates the global oil market was in balance, if not producing "an excess of 100,000 to 200,000 barrels per day".

Overnight US light crude raced to a four-month high at $52.28 a barrel, prompting assurances from some Opec members that the cartel, which controls 40 per cent of global exports, would try to cool the soaring market.

"Prices seem to be reflecting more than fundamentals," Mr Shihab-Eldin said, adding there had been a notable increase in speculative activity since the start of 2005.

"The world economy has become less sensitive to high oil prices. Last year is a testament to that," Mr Shihab-Eldin added.

Opec ministers are due to meet on March 16 in Iran and oil’s latest climb - close to last year’s record of more than $55 - has led most members to back away from any output cut in the second quarter when demand wanes after the northern hemisphere winter.

The cartel had previously called for a seasonal cut in output of up to 1.3bn, but Mr Shihab-Eldin said the emergence of China as a major oil consumer had helped soften seasonal fluctuations.

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