OPEC wary on raising output

By Alex Lawler

LONDON (Reuters) - OPEC would need evidence of a sustained drop in oil inventories before members decide to pump more, the group's secretary general said on Tuesday, rebuffing calls from consumers for higher supply.

The comments from Abdullah al-Badri are the latest sign that the Organization of the Petroleum Exporting Countries will not rush to open the taps despite crude prices at $70 a barrel. The group next meets to set policy in September.

"If we are convinced from the figures that we will get from different organizations here and in the States that there is a drawdown in the stocks, then there is a shortage in the market, of course OPEC will react," Badri said at the Reuters Global Energy Summit in London.

"But the trend would have to continue for a reasonable period of time before OPEC will react."

Crude inventories in the United States, the top consumer, fell in the latest week and are unchanged from a year earlier, according to government figures. Gasoline stocks, while rising, are below year-ago levels.

Global oil prices could rally to a record high above $80 a barrel this summer, analysts have forecast, due to tension in the Middle East, an expanding Chinese economy and a reluctant

OPEC.

Badri, a former head of Libya's OPEC delegation who took on OPEC's top job in January, said he doubted predictions that Brent crude, now trading around $70, could rise another $10 because supply of crude is enough.

"There is no shortage as far as crude is concerned," he said. "I don't think the price will go to $80. There are no fundamental problems in the market."

OPEC's 12 members pump more than a third of the world's oil.

REFINING CRUNCH

While current prices reflect political tension and violence in Africa's top exporter Nigeria, a strain on U.S. oil refineries is the main reason, Badri said.

"There are some other reasons that contributed to this $70 now. The most important factor is refineries in the U.S."

Oil companies have not built new U.S. refineries since the late 1970s, instead increasing capacity at existing plants in a bid to keep up with soaring demand for gasoline and other fuels.

OPEC agreed last year to curb output by 1.7 million barrels per day and Badri said the 10 members bound by the deals, all except Iraq and Angola, had so far made about 65 percent of the supply curbs.  Continued...