OPEC unhappy about oil price woes

OPEC President- Chakib Khelil Nigeria and other members of the Organization of Petroleum Exporting Countries (OPEC) have accused non-members for oversupplying global market with 720, 000 barrels of oil per day.

Aggrieved members of the oil cartel stated through one of their chieftains, Chakib Khelil that the non-OPEC members have continued to increase output at a time OPEC slashed 4.2 million barrels per day from its production to save the price from the oversupplied market.

Khelil, Algerian Oil Minister stated this just as oil on Monday sunk to $48.62 a barrel while events also suggested that the prices would continue to slide.

The United States, the world's largest oil consumer, said at the weekend that its economy, which consumes over 50 percent of Nigeria's oil exports, would continue to contract "for some time."

Director of the White House National Economic Council, Lawrence Summers, stated this while Khelil added that increased output by non-OPEC producers has left the market oversupplied by about 720,000 barrels a day.

"On the downside we have weak demand worldwide that's leading to high inventories and massive spare capacity at the OPEC," said Eugen Weinberg, analyst at Commerzbank AG in Frankfurt.

Crude oil for June delivery fell as much as $2.93, or 5.7 percent, to $48.62 a barrel in electronic trading on the New York Mercantile Exchange. It was at $48.89 a barrel at 1:39 p.m. in London.

Stocks declined around the world, treasuries gained and the yen strengthened after the swine-flu outbreak spread beyond Mexico and the U.S. as the American government declared a public health emergency. The Dow Jones Stoxx 600 Index of European shares dropped 1.3 percent, led by airlines.

Crude prices need to be at $70 a barrel to ensure continued investment in the industry, Abdalla el-Badri, secretary-general of the Organization of Petroleum Exporting Countries, said in Algiers yesterday. Oil may reach $60 a barrel by the end of 2009, Khelil said.

OPEC pumps about 40 percent of the world's oil. The group agreed last year to cut output by 4.2 million barrels and will review production again when it meets May 28.

Saudi Arabia, the biggest producer, is under pressure from the rest of OPEC to pare output further, the kingdom's former oil minister Sheikh Ahmad Zaki Yamani said in Cairo yesterday.

Crude prices gained last week as stock markets climbed amid optimism that the world is past the worst of the recession.

U.S. oil stockpiles rose for a seventh week to 370.6 million barrels on April 17, the highest since September 1990.

Brent crude for June settlement fell as much as $2.70, or 5.2 percent, to $48.97 a barrel on London's ICE Futures Europe exchange.