LAGOS, (Reuters):There is no fundamental justification for oil at US$100 a barrel and OPEC member Nigeria is assuming that prices will not last at this level, oil minister Odein Ajumogobia said yesterday.
Ajumogobia, who is heading to Riyadh next week to attend an OPEC heads of state summit on November 17, told Reuters that no one in the oil exporters' group would be surprised if the price fell to US$80 in the next few weeks.
"US$100 oil was speculated about three, four, five months ago, and we are there now. There is no indication why it has reached US$100 in terms of supply and demand indices," he told Reuters in a telephone interview.
Oil futures in New York struck a record high of US$98.62 a barrel on Wednesday, having risen from below US$50 at the start of the year. Prices have jumped on a mixture of speculative flows, a weak dollar, falling oil inventories and geopolitical risk.
Ajumogobia said there was no indication that US$100 oil had had an impact on demand, but he said the Organisation of the Petroleum Exporting Countries was concerned not to undermine economic growth. OPEC supplies a third of world oil.
French solution
France yesterday called on oil-producing countries to increase both output and exploration because of rising demand.
Economy Minister Christine Lagarde said she wanted the issue discussed at a meeting of EU finance ministers on Monday and at a G20 meeting in South Africa at the end of next week.
Asked about the chances of an increase in OPEC oil supply before the end of this year, Ajumogobia said:
"That will be indicated by how severe the winter is and other factors.
"What we are looking for is a trend. Because we are going down a road no one has been down before, it is difficult to see a trend," he added.
After next week's summit in Saudi Arabia, OPEC oil ministers are expected to hold a formal conference to review output levels in Abu Dhabi on December 5.
"I don't think it would shock anyone if by the time we meet in Abu Dhabi, the price is down to $80 or $85," Ajumogobia said.
"Our budget benchmark (for 2008) is US$53.80, so we are being reasonably conservative in terms of 'this is not a trend that is going to continue.' That is the assumption. I don't see that oil is going to go back to US$40, but I think US$100 is excessive," he said.
