KEY POINTS:
World oil consumption will rise as winter sets in in the Northern Hemisphere but it is not clear whether Opec needs to raise output to meet the seasonal demand, says the Oil Minister for the world's top oil exporter, Saudi Arabia.
The Organisation of Petroleum Exporting Countries is
under pressure from consumer nations to boost supply to lower prices that last month hit a record high near US$100 a barrel.
Oil did plunge to a one-month low under US$89 a barrel at the weekend, extending a fall that has lopped nearly 10 per cent off record prices on concerns about the economic health of top consumer the United States.
Asked whether he expected demand to increase during the winter, Saudi Oil Minister Ali al-Naimi said: "That is what it normally does, every winter the fourth quarter is always higher than the third quarter."
But Naimi, Opec's most influential voice, said he did not know if this meant the group's oil ministers would need to raise output when they meet in the United Arab Emirates on Wednesday.
The ministers will weigh indications that supply and demand fundamentals are sound against the possibility of making a modest increase to calm consumers, sources said.
Both Naimi and Opec president Mohammed al-Hamli expressed concern at high oil prices last week. Naimi said there was a disconnect between the fundamentals and the rising price, which he blamed on the weakening dollar, speculation and geopolitics.
At Opec's last meeting in September, with the price below US$80, Saudi Arabia persuaded other members of the producer group to boost output by 500,000 bpd (barrels per day) to ease consumer nation concern about the economic impact of high prices.
Oil fell more than US$2 to below US$89 a barrel on Friday, partly on expectations that Opec will decide to boost output at this week's meeting. Indonesia, with limited influence on Opec policy as one of the group's smallest producers, has said it favours a further output increase at this week's meeting.
Others say there is no need for higher production as markets remain well supplied.
Global demand for crude oil is expected to be satisfactory through the first quarter of 2008, Naimi said.
In November, the International Energy Agency, adviser to oil consuming countries, sharply reduced its forecast for oil demand growth through the rest of 2007 and into 2008, saying oil's march towards US$100 was already slowing consumption.
At the weekend, Qatari oil minister Abdullah al-Attiyah said Opec should tread softly to avoid flooding the market with oil it cannot absorb while paying heed to concerns about a possible global recession.
Naimi and Attiyah said they were concerned about the prospect of recession.
"I think everybody is concerned about recession," Naimi said, in response to a question after his Qatari counterpart said he was "very concerned".
"It's everyone's wish to avoid recessions," Naimi said.
The ministers were in Doha for a meeting of the Organisation of Arab Petroleum Exporting Countries (OApec).
OApec, unlike the similarly named Opec, does not set oil production policy for its member countries.
In the largely procedural meeting, the ministers agreed to waive about 70 per cent of Iraq's debt to OApec.
The debt was around US$3 million, one source who attended the meeting said.
- Reuters
