VIENNA - Cutting oil output now would be unjustified given the approach of peak winter demand, al-Hayat newspaper reported on Tuesday, quoting a senior OPEC source who also said prices were near a level that reflects market fundamentals.
The comments will reinforce expectations that the Organisation of the Petroleum Exporting Countries (OPEC) will not change its output targets at its meeting later on Tuesday, although some in OPEC have called for an informal reduction in output from those members who are over their target levels.
They also provide a rare hint of where the group's powerful Gulf members may see fair value for the price of crude oil.
"Reducing production in such conditions, especially before the first quarter of the year when oil demand increases, would be unjustified," the senior OPEC source close to Gulf countries told the London-based Saudi-owned newspaper.
"The current price is close to a level that reflects market fundamentals in terms of supply and demand, which indicate levels of $90 to $100 a barrel," the unidentified source added.
Oil fell more than $1 a barrel in early Tuesday trade as the dollar rallied against the yen and the euro and on growing expectations that OPEC would not officially cut output in order to stem a near 30 percent slump since July's record high.
Although OPEC ministers on Monday expressed concern about swelling supplies and weaker demand that they fear could trigger an even deeper sell-off, they have also been aided by the growing purchasing power of their dollar-denominated oil sales.
"OPEC should be cautious and should monitor the market situation closely to prevent a big drop in prices," the source told al-Hayat.
He said reassurances about future crude oil supply from Saudi Arabia had helped ease concerns about whether world producers would be able to keep pace with growing demand.
OPEC's Ministerial Monitoring Committee, which met late on Monday, would recommend compliance with existing output targets to the plenary session on Tuesday, a delegate told Reuters. But that would leave the group considerable scope to reduce actual production, which is running beyond formal limits.
OPEC meets again in December in Algeria.
The comments will reinforce expectations that the Organisation of the Petroleum Exporting Countries (OPEC) will not change its output targets at its meeting later on Tuesday, although some in OPEC have called for an informal reduction in output from those members who are over their target levels.
They also provide a rare hint of where the group's powerful Gulf members may see fair value for the price of crude oil.
"Reducing production in such conditions, especially before the first quarter of the year when oil demand increases, would be unjustified," the senior OPEC source close to Gulf countries told the London-based Saudi-owned newspaper.
"The current price is close to a level that reflects market fundamentals in terms of supply and demand, which indicate levels of $90 to $100 a barrel," the unidentified source added.
Oil fell more than $1 a barrel in early Tuesday trade as the dollar rallied against the yen and the euro and on growing expectations that OPEC would not officially cut output in order to stem a near 30 percent slump since July's record high.
Although OPEC ministers on Monday expressed concern about swelling supplies and weaker demand that they fear could trigger an even deeper sell-off, they have also been aided by the growing purchasing power of their dollar-denominated oil sales.
"OPEC should be cautious and should monitor the market situation closely to prevent a big drop in prices," the source told al-Hayat.
He said reassurances about future crude oil supply from Saudi Arabia had helped ease concerns about whether world producers would be able to keep pace with growing demand.
OPEC's Ministerial Monitoring Committee, which met late on Monday, would recommend compliance with existing output targets to the plenary session on Tuesday, a delegate told Reuters. But that would leave the group considerable scope to reduce actual production, which is running beyond formal limits.
OPEC meets again in December in Algeria.
