OPEC's Silva says oil prices now in "good health"

Reuters, 05.19.03, 2:48 PM ET

CARACAS, Venezuela (Reuters) - OPEC Secretary General Alvaro Silva said Monday he was satisfied with current oil prices and that the oil cartel was preparing to cut output in June in line with new quotas approved last month.

"Today we can say that the market has recuperated and is showing stable levels", Silva was quoted as telling Venezuela's official state news agency Venpres, adding prices were now in "good health".

The value of OPEC's basket of crude on Monday was around $26.24, within the cartel's preferred price band of $22 to $28 a barrel, after dipping as low as $23 a barrel after the war in Iraq, the ex-Venezuelan oil minister said.

The oil cartel is also preparing to implement production quotas -- agreed by OPEC in late April and which will take effect on June 1 -- aimed at wiping out a perceived two million barrel bpd oversupply in global crude markets, Silva said.

Oil prices spiked near $40 a barrel earlier this year ahead of the U.S. war in Iraq and following a crippling oil strike in Venezuela during December and January that temporarily shut down the OPEC nation's crude and product exports.

But prices have fallen nearly 30 percent in the last two months as Iraq's oil facilities escaped heavy damage from the war and OPEC raised output to compensate for the loss of Iraqi oil exports.

Silva said Venezuela's oil production had recovered from the oil strike, started Dec. 2 by foes of President Hugo Chavez, and that South American nation was pumping up to its OPEC quota.

Venezuela has an official OPEC ceiling of 2.923 million barrels per day (bpd), but government officials say production is closer to 3.1 million bpd.