London (Platts)--28Jan2008

OPEC on Monday described speculation as the "principal driving force"
behind rising oil prices and volatility, calling for something to be done
about its "damaging hold" on world oil markets.

In a commentary in its latest Bulletin, released just days ahead of the
oil producer group's Friday meeting in Vienna, it pointed out that its members
had increased crude supply "substantially in response to perceived shortages,
had accelerated capacity expansion plans and, where possible, had been
increasing their presence in downstream markets."

"But one area over which we have little or no influence has been
speculation, and we see this as the principal driving force behind the recent
volatility and rising prices," OPEC said.

It said oil had become a financial asset like other commodities, which
were seeing large amounts of money flowing in "to balance portfolio risks and
to seek higher returns."

Recent heightened concern about US dollar depreciation had encouraged new
inflows of money into the crude futures market, it said. "The overall effect
has been to detach oil prices from the fundamental dynamics of supply and
demand," OPEC said.

OPEC ministers will meet Friday in the Austrian capital to decide whether
to change current output targets, set at 29.673 million b/d for 12 members but
not Iraq. Major consuming countries, in particular the US, have called for
more oil supply to help ease concerns about economic recession.

The main message from OPEC in the run up to the meeting has been that oil
markets are adequately supplied with crude and that there is no need for an
output increase.

OPEC's Vienna secretariat last week published its latest forecasts,
projecting demand for OPEC crude in the first three months of this year at
31.99 million b/d, the volume it says its 13 members pumped in December.
However, the projections show demand for OPEC crude falling by 1.45 million
b/d in the second quarter.

US crude futures traded at a record $100.09/barrel in New York on January
3 but have since fallen back by $10-12/b. At 12:42 GMT Monday, the contract
was trading around $89.43/b.