OPEC may maintain quotas next month

OPEC may maintain quotas next month

Bloomberg, Jakarta

OPEC President Purnomo Yusgiantoro said he may recommend the
group leave output quotas unchanged at a meeting next month,
signaling a shift from calls in December by some members for a
production cut.

Purnomo's comments come after oil prices in New York last
week rose to the highest since before the invasion of Iraq in
March of last year. Prices surged as record low temperatures in
the U.S. drove up demand for heating fuel, helping to drain crude
oil inventories that fell to a 28-year low this month.

The Organization of Petroleum Exporting Countries (OPEC),
which pumps a third of the world's oil, meets Feb. 10 in Algiers
to discuss output for the second quarter, when demand declines as
winter ends in Europe and the U.S. OPEC members outside of Iraq
are pumping as much as 1.5 million barrels a day of crude oil
above existing quotas to curb rising prices, Purnomo said.

"I'm not looking at the option to change or increase the
quota because I see the reality in the crude market," Purnomo
said in an interview in Jakarta. "With that situation it will
leave us the option to just continue the present situation."

Last week, Saudi Arabian Oil Minister Ali al-Naimi said he
wants an oil price of US$25 a barrel, in the middle of the
group's target range of $22 to $28 a barrel. The OPEC price index
last traded at $30.17. The comments from OPEC's most influential
member are another indication the group may not cut production
next month.

Crude oil for March delivery traded at $34.32 a barrel in
after-hours electronic trading on the New York Mercantile Exchange
at 12 p.m. London time.

The 10 members of OPEC with output quotas, all except Iraq,
are producing about 26 million barrels a day of crude oil, or
above their stated target of 24.5 million barrels, said Purnomo,
who is also Indonesia's minister of energy and mineral resources.

Global oil demand may fall 2.5 million barrels a day in the
second quarter, he said. There's also an "overhang" of supplies
that will increase toward the second quarter, adding to a global
surplus, Purnomo said.

OPEC will meet again in Vienna on March 31, when the group
will review quotas using the latest figures on demand in February
and March, he said. The group will also hear from Iraq on
developments in the repair of oil fields and output from the
country, which will also influence a decision on quotas, Purnomo
said.

Officials in Iraq said on Monday supplies from the south may
rise by 15 percent this year to 2.3 million barrels a day, and a
second Persian Gulf port may be reopened. The nation's pipeline
north to Turkey has been shut by sabotage.

OPEC's 10 members with quotas adjust output to keep their
benchmark between $22 and $28 a barrel. OPEC would prefer a crude
oil price at $25 a barrel, Purnomo said.

"The ideal crude price is at $25 a barrel. I think that's
the price that we want to see," Purnomo said. "We don't want the
price too high, but we don't want oil prices too low."

OPEC is concerned about the gains in crude oil prices because
it adds to costs in oil-consuming countries and in turn raises
prices for goods imported by oil-producing countries, which are
mostly developing nations, he said.

Last month, Saudi Arabia's al-Naimi and other OPEC officials
said the drop in the dollar against currencies such as the euro
warranted keeping prices higher than OPEC's target range.

Some oil-producing nations have said they may price their oil
in euros to maintain the purchasing power of their oil revenue.

Use of the euro as the currency to price oil may be discussed
at the Feb. 10 meeting, Purnomo said.

"The comment I can give, not as OPEC president, but as
Indonesian oil minister, is that every OPEC member has different
sensitivity on the currency," Purnomo said. "The important thing
is, can our buyers accept the euro instead of the dollar."