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UPDATE 2-OPEC's Badri says oil price OK, sees smooth Dec meeting

Published 11/24/2010, 11:51 AM
Updated 11/24/2010, 11:56 AM

* Sees smooth OPEC meeting in December

* Says oil price comfortable at current levels

* Wants regulation to prevent speculators "going wild"

(Adds more quotes)

By Alex Lawler

LONDON, Nov 24 (Reuters) - Oil prices are comfortable for producers and consumers at current levels, OPEC's secretary general said on Wednesday, predicting a "smooth" meeting of the producer group next month.

Abdullah al-Badri also called for regulation to curb excessive volatility in oil prices, saying the bilateral over-the-counter (OTC) markets lacked guidelines and without such rules speculators could "go wild."

The Organization of the Petroleum Exporting Countries has kept its oil output target unchanged for almost two years since announcing a record output cut to support prices. Some of its oil ministers have predicted OPEC will do the same when it meets on Dec. 11 in Quito, Ecuador.

"Talking to the ministers they are comfortable and the consumers are also comfortable," Badri said of the oil price. "I cannot pre-empt the conference in Quito but I will tell you it is going to be a smooth meeting."

Oil was trading above $82 a barrel on Wednesday and Badri reiterated his view that a rise in the price to $90 would not hurt the world economy, suggesting no prospect yet of OPEC deciding to boost supplies.

Badri said he was unhappy with the role of speculation in the oil price, which some including OPEC blamed for sending oil to a record high near $150 a barrel in 2008. The OTC markets, he said, have "no guidelines".

The U.S. Commodity Futures Trading Commission is set to unveil in December new rules to limit how many energy, metals and agricultural contracts hedge funds, investment banks and other speculators can control.

This week, Badri participated in a two-day meeting of energy officials in London to discuss the links between the physical and financial markets for energy and the regulatory framework.

He declined to discuss details of the meetings, but made clear OPEC wanted to see less volatility in the oil market.

"Reasonable volatility is part of the market, but you cannot really have an extreme volatility where prices will go $10 up, $10 down," Badri said.

"Speculation in the futures market, the financial market, we cannot get rid of them," he said. "At the same time, if they are out of control without guidelines they will really go wild."

"At least they are trying to put something into effect very soon. I think that the financial market knows that somebody is watching, working to have some guidelines for them," Badri said of the CFTC plan. (Editing by William Hardy) (London energy desk, +44 207 542 4087, alex.lawler@reuters.com; Reuters Messaging: alex.lawler.reuters.com@reuters.net))

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