TOKYO (Reuters) – Qatar Oil Minister Abdullah al-Attiyah said on Saturday that OPEC will have to cut oil production further when it meets in Nigeria next month, and that a $60 U.S. crude oil price was “moderate.”
“Our Abuja meeting has no choice but to accept a cut,” Attiyah told Reuters, in the hardest comments yet from an OPEC official to indicate that a further reduction in supply will be required. “The market is oversupplied.”
“The Doha cut was not efficient in stabilizing the market.”
He said a cut could be around 500,000 to 1 million barrels per day, although it was hard to predict.
“We have to be very careful about how to treat surplus (supplies),” he said.
OPEC, which pumps about a third of the world’s crude, agreed last month in the Qatari capital to its first formal output curbs in over two years, stemming a 25 percent slide in oil prices from their mid-July record high of $78.40 a barrel.
But in the last week prices resumed falling amid still high U.S. inventories and a broad commodities sell-off by investors, taking crude under $56 a barrel to its lowest in 17 months.
“This volatility is phenomenal,” Attiyah said of prices.
Attiyah, who heads energy policy for OPEC’s smallest oil producer but is part of the influential circle of Gulf nations, also sent more strong signals that the group would no longer tolerate U.S. crude oil prices below $60 a barrel — treble what they were just four years ago.
“The world lives with $60 … $60 per barrel crude is moderate for consumers,” he said in an interview concluding a one-week trip to Japan, the world’s third-largest oil consumer.
OPEC President Edmund Daukoru, Saudi Arabia and other Gulf OPEC members have all said they see scope for deepening a 1.2 million barrel per day (bpd) supply cut when OPEC next meets on December 14, pointing to high fuel stocks in top consumer the United States as evidence that the market remains oversupplied.
OPEC has said if it keeps pumping at current rates, fuel stocks in industrialized consumer nations will keep rising faster than normal in the second quarter of 2007.
Attiyah reiterated that all OPEC members were committed to the previous cut, which took effect from this month, despite skepticism among analysts who believe that the group may meet only about half the curbs.
Attiyah also said Qatar, which is set to become the world’s biggest exporter of liquefied natural gas (LNG), would next year agree new sales deals that will nearly double exports of the fuel to Japan.
“We will finalize agreements next year to increase sales from 6 million tonnes per year to 11 million.”
Japan is the world’s biggest LNG importer, absorbing almost half of the fuel exported globally every year.
Attiyah did not specify when the contracts would take effect, but most LNG deals being signed now are due to begin around 2010.
Attiyah also said the Gulf country’s first gas-to-liquids project, the Oryx plant operated by South Africa’s Sasol Ltd. , has begun commercial production and should start shipping its first fuels before the year-end.