Speculators, not OPEC drive oil: Libya

LONDON (Reuters) - Speculators have taken over OPEC's power to move prices and there is nothing more the producer group can do to calm oil markets trading at more than $70 a barrel, Libya's most senior oil official said on Tuesday.

The Organization of the Petroleum Exporting Countries (OPEC), which is already pumping at close to capacity, meets next week in Caracas when it is widely expected to leave existing output quotas unchanged.

"OPEC has done all it can do," Shokri Ghanem, head of Libya's National Oil Company, told the Reuters Energy Summit by telephone link.

"OPEC is not determining the price. OPEC does not fix the price at this level."

Although OPEC has been able in the past to influence prices by limiting production, Ghanem said it now had no control over markets driven by anxiety about supplies from OPEC producers, such as Iran, and by speculative activity.

"This cartel abdicated the pricing power to the futures market," he said, adding speculation had driven market volumes to levels far in excess of fundamental trade.

"They are trading around one billion barrels per day on the paper market. On the physical market, 85 million is consumed," he said. "OPEC can't do anything. OPEC can't close the futures market."

On the basis of supply and demand, he estimated the price would be $40-$50, compared with well over $70 a barrel for U.S. crude futures CLc1 on Tuesday.

He said concern about Iran's dispute with the West over its nuclear program, as well as difficulties in boosting Iraq's production could be adding as much as $15 a barrel to the international price.  Continued...