Vienna (Platts)--31Jan2008

OPEC ministers Thursday appeared to be steering towards leaving current
crude output targets unchanged at Friday's formal talks in Vienna, reiterating
that oil markets were well supplied and that the recent price surge had little
to do with fundamentals.

Two ministers said the next meeting on March 5 could be the time to
adjust output.

"Most likely there will be a rollover," a senior OPEC source said.

The source acknowledged that commercial inventories were "a bit low" but
said they were now starting to rise. In addition, he said, the lower-demand
second quarter was approaching, and the start of the spring refinery
maintenance season would also reduce demand for oil.

Furthermore, the source said, OPEC's next meeting, on March 5, was just a
month away.

OPEC's Algerian president Chakib Khelil said he did not think adding more
crude oil to markets would have an impact on price because there were too many
other factors not related to supply and demand, ruling out the need for an
imminent change in OPEC's current 29.673 million b/d production target.

"If we make a gesture, the market will not take it ... it's as if we had
not increased. So why increase? We increase if there is demand," he said.

He said that oil inventories in the US, the world's biggest consumer, had
fallen in September when refineries were operating at high rates to stock up
product for the winter but that US inventories were now rising and were
expected to rise further as the northern hemisphere winter draws to an end.

Asked whether OPEC might heed a US call for more output to bring down
prices, Khelil said Washington's plea was for markets to be well supplied and
applied not only to OPEC but to other oil producers outside the cartel.

Khelil, who has previously expressed concern about the impact of a weaker
US economy on demand for crude oil, said that remained a preoccupation.

"That is our main concern, the possibility of a US recession. We are
concerned about it," Khelil said though he added that there were no signs yet
of a recession in the US.

Libya's delegation chief Shokri Ghanem, asked if he would rule out a
change in the 12-member target, said: "Yes, I would."

There was "no one at this meeting that wants to do anything," Ghanem told
Platts. "There is concern about the global economy. We have to wait and see
and study the market. Look at the demand picture. See whether [International
Energy Agency] projections prove right."

Ghanem, a former prime minister who now heads Libya's National Oil
Corporation, said it was premature to predict what OPEC might do at its next
meeting on March 5. "It is too early to say. All these factors will have to be
discussed and we will make a decision based on those developments in March,"
he said.

The International Energy Agency January 16 said it expected world oil
demand in 2008 to average 87.8 million b/d, up 2 million b/d or 2.3% from its
previous forecast, but warned that the projections could be further revised
"if forthcoming assessments from the IMF and the OECD point to a
weaker-than-expected outlook for the US economy."

The IEA pegged the 2008 call on OPEC plus inventories at 31.7 million b/d
for the year as a whole and at 32.7 million b/d and 31 million b/d in the
first and second quarters.

Iranian oil minister Gholamhossein Nozari said oil markets were well
supplied and that there was no need for an increase in production. His
comments were echoed by Venezuelan oil minister Rafael Ramirez, who said the
market was currently balanced but that OPEC needed to be wary of the possible
impact on oil demand of the current economic slowdown, and by Nigeria's Odein
Ajumogobia, quoted in Punch newspaper ahead of his arrival in Vienna.

OPEC's head of research, Hasan Qabazard, was quoted Thursday by Kuwait's
official news agency KUNA as saying he did not expect ministers to agree to a
production increase, and that statistical data indicated there would be 1.4
million b/d of oversupply in the second quarter because of the anticipated
fall in demand and, as a consequence, a build in inventories.

Qatari oil minister Abdullah al-Attiyah and Venezuela's Rafael Ramirez
said the March meeting could warrant a change in production targets, without
specifying an increase or a cut in output.

"I don't think we need a change [now]," Attiyah said, adding: "In March,
maybe."

Ramirez said OPEC needed to be "very careful with the question of the
economy and the slowdown and its possible effects," and that a fall in oil
demand and prices could prompt OPEC to restrict supply.

"If this happens...we would be in favor of cutting oil production and
would probably propose that at the next meeting," he said.

Saudi Arabian oil minister Ali Naimi, whose country exerts a great deal
of influence on OPEC decisions, has so far declined to express a view on
output beyond describing market fundamentals as "sound" when he arrived in the
Austrian capital on Wednesday.