By Margaret McQuaile

May 28 - After four consecutive days below $70/barrel, OPEC's crude basket on May 27 climbed back into the $70-$80/b range the oil producer group has adopted as an informal target.

In just three weeks, the basket had plummeted by more than $17 to $66.84/b on May 25 from $84.16/b on May 4.

When OPEC issued its latest projections of demand for its own oil on May 11, it was already concerned about price volatility, noting that US crude benchmark WTI had lost more than $10/b in just three days.

But top OPEC officials are not pressing for an emergency ministerial meeting at this point.

In the week ended May 28, Kuwaiti oil minister Sheikh Ahmed Abdullah al-Sabah said he was "not yet" worried by the precipitous fall in prices, which he attributed to such factors as the Greek debt crisis, the weakness of the euro and the strength of the US dollar, and that he saw no need for the cartel to meet before its next scheduled meeting in Vienna in mid-October.

 Iran's representative on OPEC's governing board, Mohammad Ali Khatibi, also sees "no pressing need" for an extraordinary meeting, saying on May 23 that OPEC would only need to call emergency talks "if the oil market heads in a worrying direction."

He blamed what he called "a second wave of economic crisis in Europe" for the fall in prices.

Both Sheikh Ahmed and Khatibi expect prices to pick up in the second half of the year when demand is likely to increase.

The Kuwaiti minister is hopeful that prices will then stabilize in a $75-$85/b range, while Khabibi expects oil prices to average between $70 and $80/b for the year as a whole.

Mohammed Alipour Jeddi, head of the OPEC secretariat's petroleum studies department, told a Platts conference in London the week ended May 28 that competing forces had kept crude oil prices largely stable between $70 and $80/b over the past six months.

Among these forces, he said, were slower-than-expected economic recovery, eurozone problems, excess inventories both on land and at sea, and higher upstream and downstream capacity on the one hand.

Balancing these forces were another set of factors, including a weak outlook for non-OPEC supply, geopolitical concerns and the perception of future tightness in oil market fundamentals.

OPEC, incidentally, doesn't subscribe to the idea of future tightness in fundamentals, Alipour said, pointing out that there was an increasing cushion of supply to meet any rise in demand and that forward stock cover stood at more than 60 days whereas a more normal level was 52/53 days.

OPEC currently has some 6 million b/d of spare crude production capacity, he noted. Furthermore, with markets in contango, the incentive to store crude and sell it into the forward market continues.

Latest estimates put the volume of oil in floating storage at 126 million barrels, of which 80 million barrels are crude, Alipour said.

OPEC will be keeping its fingers crossed that the American driving season, which kicks off on May 31, will live up to expectations.

In its latest monthly oil market report, it forecast that world oil demand would rise by 900,000 b/d this year to reach an average level of 85.38 million b/d this year, with the pace of US gasoline demand recovery a key variable.

US demand is sensitive to higher pump prices and if demand turns out to be lower than expected during the peak summer consumption season, then total world oil demand will be lower than the current estimate, it said.

Demand from the US could also be hit if the manufacturing and petrochemicals industries miss growth forecasts, reducing industrial fuel use.

Although it has upped its previous forecast of world oil demand by 170,000 b/d, OPEC has raised its forecast of the call on its own crude by just 40,000 b/d to 28.85 million b/d, which is well below current production. Using secondary sources, OPEC estimates its production at 29.251 million b/d in April.

OPEC sees demand for its own crude averaging 27.82 million b/d in the April-June period but rising in the second half of the year to average 29.62 million b/d in the third quarter and 29.79 million b/d in the fourth.