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To: patron_anejo_por_favor who wrote (269394)	12/3/2003 2:23:41 PM
From: ild	Respond to of 436258

Saudi Oil Czar Suggests OPEC Will Keep Crude Prices High By BHUSHAN BAHREE and SUSAN WARREN Staff Reporters of THE WALL STREET JOURNAL VIENNA -- The oil minister of Saudi Arabia, the de facto leader of OPEC, suggested the cartel will aim to keep oil prices higher than it otherwise would because a weak dollar is eroding the value of member nations' petroleum-export revenue. The statement Wednesday by Ali Naimi came as the dollar set a record low against the euro for a fourth-straight trading day, leaving the currency down some 15% since the start of the year. Since the spring of 2000, the Organization of Petroleum Exporting Countries has targeted oil prices in a range of $22-$28 a barrel, pledging to vary production levels to keep prices within this band, preferably around $25 a barrel. On Tuesday, the latest day for which OPEC has compiled price data, the cartel's benchmark basket of crudes closed above the band at $28.43 a barrel. U.S. benchmark crude, usually priced several dollars higher than the OPEC basket, was trading at $30.78 a barrel. Mr. Naimi, in Vienna for a gathering of the cartel's oil ministers Thursday, told reporters that the dollar has depreciated by some 35% in the past three years. He said the current price band didn't need to be changed. But he also suggested that OPEC wants a higher oil price. The aim, he said, was to keep the price of oil within the cartel's current band, but using "the purchasing power of the old, good dollar." Mr. Naimi didn't indicate how much of the dollar's recent erosion OPEC might seek to offset through higher prices. In October, Venezuelan President Hugo Chavez suggested OPEC should consider raising the target range to $25-$32 and said the issue would be taken up at Thursday's meeting. OPEC officials denied such a plan at the time. Wednesday's call by the Saudi oil czar for an informal rise in price targets runs a risk of backfiring. OPEC's existing price goals have been endorsed, even if reluctantly, in a gentleman's agreement by the U.S. and other major consuming nations and their energy-watchdog organization, the Paris-based International Energy Agency. Breaching that understanding could prompt a push by buyers for non-OPEC sources of oil. Some OPEC officials Wednesday noted that higher prices would reduce demand for oil and shrink OPEC's share of a global market in which the cartel effectively acts as a swing producer, supplying the oil that is needed when crude from other sources runs short. Mr. Naimi's statement "effectively means revising the dollar price of oil," said Nordine Ait-Laoussine, a former Algerian oil minister, on the sidelines of the OPEC meeting. "That means they will consider revising the price band," though not necessarily at Thursday's meeting. OPEC officials and industry analysts Wednesday were predicting that the cartel's ministers will decide Thursday to keep output quotas unchanged for now, precluding a supply cut that would push prices higher. Instead, ministers are expected to meet again early next year, perhaps in February, to decide on whether to cut supply. Oil use tends to fall for seasonal reasons in the April-June quarter. The dollar's weakness has partially offset the windfall that Saudi Arabia and other exporters have enjoyed this year from higher oil prices. That's because oil sales around the world are denominated in dollars, due to the dominant role the U.S. plays in the market as the world's top buyer. Higher prices would be felt disproportionately by major petroleum importers such as China, the world's No. 2 user of oil, whose currency tracks the dollar. The stronger euro and yen have enhanced the purchasing power of Europe and Japan, offsetting for them some of the rise in oil prices. The U.S. might be the hardest hit, though. It consumes some 20 million barrels of oil a day, or slightly more than a quarter of the global total. Its bill for oil imports of some 10 million barrels would rise. But prices for domestically produced oil would also rise in line with global rates, meaning a shift in income from motorists and other consumers to oil companies. Adam Sieminski, an analyst at Deutsche Bank in London, said Mr. Naimi's comments confirm what has seemed evident for several months: OPEC doesn't want prices to drop below what it had previously defined as its upper limit of $28 a barrel. OPEC's recent production decisions -- including a resolution to cut output quotas in September -- may not constitute an increase in the price band, but do make the band meaningless, Mr. Sieminski said. "They want high revenues, so they're going to justify the high price any way they can."