Indonesia dampens Opec cut talk

Source: NZOOM-Reuters World oil prices slipped on Wednesday when Indonesia said Opec did not need to curtail supplies at a meeting next week despite the expected resumption in exports from Iraq.

Indonesian Mines and Energy Minister Purnomo Yusgiantoro said the cartel did not need to consider cuts while prices were inside Opec's $US22-$US28 per barrel band. International benchmark Brent crude oil fell 15 cents to $US27.13 per barrel, while US crude futures shed nine cents to $US30.58.

"Now that a consensus appears to be emerging within Opec that a production cut at its meeting next week is not necessary, we expect crude oil prices to continue weakening over the next few days," said analysts at Barclays Capital Research.

Some Opec ministers had hinted that a cut might be on the cards at next week's meeting in Qatar, but prices have risen strongly towards the upper end of Opec's target range.

Opec's reference export price stood at $US27.09 on Tuesday.

"Our interest is the price stays above $US22 per barrel. If prices stay above that, then there is no need for Opec to cut quotas," Yusgiantoro said.

Selling intensified when US government data showed inventories in the world's largest consumer rose unexpectedly strongly last week.

Commercial stocks of crude oil and refined products rose nine million barrels last week, about 1%.

Tanks are still below their normal levels for this time of the year, due to a series of supply interruptions from Venezuela, Nigeria and Iraq.

War-torn Iraq has suspended exports since the US-led war began in March and the authorities expect the first tankers to lift crude from storage tanks in the middle of June.

Previous targets for resuming exports have been put back because of unexpected problems with looting and sabotage in the lawless country.

The head of Iraq's southern oil company, which produced most of Iraq's crude before the war, said on Wednesday output there was just a fraction of pre-war levels because of the security problems.

Total Iraqi output now stands at 750,000 barrels per day, about a quarter of pre-war levels, and Iraqi authorities in Baghdad expect it to double by the middle of the month.

Paul Stevens, professor of petroleum policy at Britain's University of Dundee said the looting and sabotage indicated that current forecasts for Iraqi exports were far too high.

"People are grossly underestimating the time it will take to restore pre-war capacity in Iraq," he said.

"The U.S. and Britain don't have the troops on the ground or the administration to do it."