OPEC President Says OPEC Won't Trigger Price-Band Mechanism

Outgoing President of the Organization of Petroleum Exporting Countries Abdullah bin Hamad al-Attiyah said Tuesday the group won't necessarily apply its price mechanism next week.

The group's basket price is expected to complete 20 days outside its benchmark price band next week.

OPEC said earlier in the day that its reference basket price was $29.53 a barrel Monday from $29.91/bbl Wednesday. It was the 18th consecutive trading day the price has been above the group's preferred target range of $22-$28/bbl.

OPEC pledges to keep its basket price within the range by raising output by 500,000 barrels a day if the basket price holds above $28/bbl for 20 consecutive trading days, or lowering output by 500,000 b/d if the basket price stays below $22/bbl for 10 consecutive trading days.

"The mechanism is still there, but current high oil prices has nothing to do with supply," al-Attiyah said. "We have created this mechanism for normal (market) conditions...(so) we have to differentiate between the normal and abnormal factors in triggering it."

Al-Attiyah said oil consumers had been complaining about high oil prices, but not a shortage of oil, adding that OPEC had previously intervened in the market during labor actions in members countries Venezuela and Nigeria which temporally shut off oil exports from these countries, as well as during the war in Iraq.

Al-Attiyah said he was still concerned about expected market condition in the second quarter when world oil demand usually falls.

"We'll address this concern in February," he said, when OPEC is scheduled to hold an extraordinary meeting in Algeria on Feb. 10.