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Oil producers' cartel OPEC should not raise production now that prices have eased below $55, Nigeria's top oil official said on Tuesday, the second member to oppose moves by Middle East Gulf nations to increase output.
SINGAPORE (Reuters) -- Oil producers' cartel OPEC should not raise production now that prices have eased below $55, Nigeria's top oil official said on Tuesday, the second member to oppose moves by Middle East Gulf nations to increase output.
The comments are in sharp contrast to those of OPEC's president, Sheikh Ahmad al-Fahd al-Sabah, who told Reuters on Monday the cartel was pressing on with a second output increase in May to build up stockpiles ahead of strong demand expected in the second half.
"I don't go along with that," Nigerian Presidential Adviser on Petroleum and Energy, Edmund Daukoru, told reporters.
"I think that at the current (price) level there is no need to activate the second tranche."
The Organization of the Petroleum Exporting Countries boosted output by 500,000 barrels per day (bpd) at its March 16 meeting and left room for a second increase if prices failed to drop below $55 a barrel.
Benchmark U.S. light crude futures spiked to an all-time high of $58.28 a barrel last week, but had fallen to $53.81 on Tuesday, up 10 cents on the day.
Daukoru said OPEC should only consider another production increase if oil prices were to climb back above $55 for a period of 10-14 days.
Raising output now would risk prices sliding lower during the second quarter, the weakest for demand, he said.
"If we are not careful, our concern will be (for oil prices to move) in the opposite direction," he told reporters on the sidelines of a presentation for Nigeria's new round of offshore exploration licensing.
Algerian energy minister Chakib Khelil said at the weekend he saw no reason for OPEC to raise supplies.
Sheikh Ahmad, who is also Kuwait oil minister, said real output by the cartel was set to hit 28.5 million bpd in May, up from just over 28 million bpd this month, the bulk of which likely coming from Saudi Arabia.
The kingdom, which holds most of OPEC's spare output capacity, is moving on with plans to lift supplies despite dissent within the cartel, telling refiners in Asia it would sell them about 10 percent more crude in May than in April, market sources said on Tuesday.
Asked about Riyadh's decision this week to boost supplies, Daukoru said it was their sovereign right but he supported any rhetorical efforts aimed at moderating prices.
He said that falling prices showed OPEC was right in its assertion that speculation and not fundamentals had been responsible for pushing U.S. crude to record heights.
In comments to reporters, Daukoru said he thought $40 a barrel for U.S. light crude would be a "reasonable" floor for OPEC's yet-to-be-established new price band.
He declined to give a specific level for a possible upper limit to the range, but some officials have said it could be around $50 a barrel.
OPEC Secretary-General Adnan Shihab-Eldin said at the weekend the cartel could decide on a new price band when it meets in September after having abandoned in January its $22-$28 a barrel band for its basket of crudes.
OPEC's heavier, more sour crude basket is typically about $5-$7 a barrel cheaper than U.S. crude oil futures.
Daukoru made no predictions about what action the producers' group might take at its next scheduled meeting on June 15, but said OPEC should continue to carefully monitor the market.