Qatar's Attiyah sees oil surplus in market due to weak demand

Dubai (Platts)--24Jan2006

Qatari oil minister Abdullah al-Attiyah said Tuesday that OPEC could do
nothing when ministers meet in Vienna Jan 31 because although demand was weak
and stocks were building, high prices made it difficult to trim supply in the
second quarter.

     "What we say is that there is a surplus and prices have nothing to do
with a shortage of supply. We have seen no panic in the market and prices are
reacting to political events," Attiyah told Platts in a telephone interview
from the Qatari capital Doha.

     "Some analysts say that there is a surplus of between 1-mil and 1.5-mil
b/d and others say it is as high as 2-mil b/d. OPEC will face a very difficult
meeting because it will be very difficult not to do anything," he added.

      The volatility in oil prices in recent days, which saw light sweet crude
oil futures nudge $70/bbl, is a psychological reaction that has nothing to do
with fundamentals, he said. Oil producers were not finding any strong demand
for crude oil from either end users or traders.

     "You saw prices jump, then come down. It is a temporary reaction. Prices
are moving up and down very fast."    

     Attiyah implied that were it not for the high price, OPEC would need to
cut production to avoid a big stockbuild in the first quarter.

     "It is very complicated. There is a surplus but they can do nothing,"
Attiyah said.

     Asked what action he would favor in Vienna, he replied: "With these
prices, there is nothing to do."

		-- Kate Dourian, kate_dourian@platts.com

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