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OPEC wants oil to reach $70 a barrel

OPEC wants oil to reach $70 a barrel
Apr 26 11:21 AM US/Eastern

OPEC wants to see oil prices rising to more than 70 dollars a barrel, the oil cartel's secretary general Abdalla El-Badri said Sunday.

"The price of 50 dollars is not enough to cover investment costs for the future," El-Badri told reporters in Algiers.

"The price which allows reasonable and acceptable revenues is more than 70 dollars a barrel," he added.

El-Badri was speaking after talks with Energy Minister Chakib Khelil ahead of the next meeting of the Organization of Petroleum Exporting Countries in Vienna on May 28.

"There are positive signs of a recovery in the world economy, which we have to take into account before taking a decision on the future," he added, in response to a question regarding a possible cut in oil production.

"Our forecasts are coherent, those of the IEA (International Energy Agency) are exaggerated," he added.

On April 15, OPEC lowered its forecast for demand for crude oil in 2009 because the drop in consumption caused by the worldwide recession.

It now says production will drop by 1.6 percent, or 1.37 million barrels a day, down to 84.18 mbd. Its previous report in March forecast a drop of 1.01 million barrels a day to 85.55 mpd.

The IEA, in its latest forecast earlier this month, cut oil consumption by 1.0 million barrels a day for 2009 to 83.4 million barrels, citing the weak global economy as a factor.

OPEC countries still had another 700,000 barrels a day to take out of production for the cuts agreed at the last OPEC meeting at Oran in December — 2.2 million barrels a day — to be 95-percent applied, said El-Badri.

"OPEC wants a balance between the supply and demand and acceptable prices," he added.

Khelil stressed that any decision OPEC made at the May meeting would "depend on changing supply and demand, the level of stocks — all that will be analysed" in relation to the current crisis.

"If there is an economic recovery, we will need to cut back," he added.

Oil prices jumped above 51 dollars a barrel on Friday, as a flagging US dollar and rising stock markets offset concerns about weak demand arising from the global economic downturn.

New York's main futures contract, light sweet crude for June, gained 1.93 dollars to close at 51.55 dollars per barrel.

In its April monthly bulletin, the cartel revised down its estimate for world crude demand this year and predicted that a "devastating contraction" in consumption would keep prices under pressure in the months ahead.