OPEC President Ali Rodriguez said that the oil cartel could alter its production levels before its members meet again in June if the 20-day average price of its crude oil basket moves outside the target $22-$28 range.
Rodriguez, also Venezuela's Energy and Mines Minister, told a news conference with foreign correspondents that it was too early to assess OPEC's March 27 decision to increase production by 1.7 million barrels per day (bpd) and adopt the price band mechanism, but he was not worried by the current price of oil.
OPEC's oil basket price has fallen below the bottom of the cartel's target range in recent days, although the 20-day average price stood at $24.36 per barrel last Tuesday, according to figures compiled by Reuters.
Asked if OPEC could modify its current output ceiling of 24.7 million barrels per day (bpd) if the 20-day average fell below $22 per barrel, he replied: "It is perfectly possible. If there is a fall so significant as to indicate that the trend...will be maintained below $22 of course (the measures) would be applied."
He added that OPEC's monitoring committee would study the situation before informing each country of its share of the cut.
"(Prices) don't worry us for the moment. The basket fell below $22 yesterday, but today it recovered its position in the range," Rodriguez said, noting that there is normally a seasonal fall in prices in the second quarter. "If the average over 20 days is below $22 per barrel a cut is made," Rodriguez said, clarifying doubts over whether the supply change was triggered by 20 consecutive days outside the range or a 20-day average.
Rodriguez said the price band mechanism was still in its infancy and OPEC wanted to test the market's reaction to this new system. "This mechanism is a first step in the direction towards stabilizing the markets and it has to be put to the test," he said.
OPEC ministers are due to meet again on June 21 in Vienna, and Rodriguez said they would "make an assessment of the decisions taken -- the output increase and the mechanism -- so we can progressively perfect the mechanism."
Rodriguez said he personally supported narrowing the target range in the future if possible, to reduce speculation on highly volatile oil futures markets, although he conceded that it could not be totally stamped out. He did not specify how much he wanted the price band narrowed.
World oil demand was likely to rise by up to three million barrels per day by the end of the year, and Rodriguez said more OPEC output hikes
were possible later in the year, although he said it was too early to be specific.
The minister said he did not have information about whether state oil company Petroleos de Venezuela had completed the output rise due to take place on April 1, but he insisted that the company was able to fill its new quota of 2.845 million barrels per day. Venezuela's export rise would consist mostly of heavy crude oils, as those were the first to be cut last year when prices slumped, he added. - (Reuters)