OPEC to keep production steady to ensure sufficient supply: Report

OPEC said it would keep pumping at current levels to ensure adequate supplies as extremists target oil facilities from the Middle East to Nigeria and a confrontation escalates over Iran's suspect nuclear program, the Associated Press reported.

Edmund Daukoru, president of the Organization of Petroleum Exporting Countries, said Wednesday the output quota would remain untouched at 28 million barrels a day, but that the 11-nation cartel would keep close tabs on the situation in the period between now and summer when demand traditionally eases.

Daukoru conceded the group was preoccupied with prices that have hovered for months above US$60 per barrel - well over the US$40-US$50 range that many OPEC members have called optimal ? but he refused to say what price threshold would trigger action.

?We are concerned that prices don't get out of hand ? that there's some sanity to price levels,? Daukoru said.

?One thing OPEC tries to do is preserve market stability,? he added. ?We have said we will continue to monitor closely, and depending on what we see we will do what is best for the market. ... We need to know more about demand.?

Prices have remained stubbornly high for months, but dropped below US$60 after OPEC's announcement and data from the United States showing a sharp rise in crude stockpiles.

Light, sweet crude for April delivery fell US$1.93 to US$59.65 a barrel in afternoon trading on the New York Mercantile Exchange. The contract has fallen more than US$3 this week since Friday's settlement price of US$63.67.

Demand is expected to slide by up to 2 million barrels a day in the second quarter.

OPEC's decision to leave production levels alone won't bring beleaguered motorists any relief at the gas pumps, said Jason Schenker, an economist with Wachovia Corp. He predicts retail gas prices could rise with the approach of the summer driving season because of higher transportation costs and expenses for ethanol blending.

?We're not looking for a marked increase, but we could see prices higher than last year,? he said.

OPEC pumps about a third of the world's oil, although Daukoru said it would hold about 40 percent of the market through 2010 and could hit 50 percent thereafter. Its daily quota does not include about 1.5 million barrels added by Iraq - a comparative dribble that also worries some members.

Kuwait's oil minister, Sheik Ahmed Fahd Al Ahmed Al Sabah, said he expects prices will drop below US$60 a barrel between April and June, but are likely to rebound to the US$60 range in the fourth quarter. He said he believes political turmoil and extremism have added US$5 to US$8 to each barrel.

Underscoring how world events are buffeting the market, OPEC issued a statement acknowledging that "world crude oil prices remain volatile, these being driven by geopolitical factors and associated concerns regarding potential future supply disruptions."

It stressed, however: ?The market is fundamentally well-supplied with crude oil.?

Daukoru said OPEC's next meeting would be June 1 in Caracas, Venezuela. That country's oil minister, Rafael Ramirez, said he would try anew to push through a cut of at least half a million barrels a day. (*)