Thu Jul 15, 2004
By Andrew Mitchell

LONDON (Reuters) - OPEC oil producers were set on Thursday to cancel next week's ministerial meeting, confident they can simply implement a planned increase in supply quotas without endangering oil's price boom.

"The meeting has been canceled after consensus among member states," a senior OPEC official told Reuters by telephone. OPEC's Vienna secretariat was expected to confirm the decision later on Thursday, an OPEC spokesman said.

The Organization of the Petroleum Exporting Countries will enforce a planned 500,000 barrels per day (bpd) increase in formal quotas from August 1, the spokesman added. OPEC's next scheduled meeting is on September 15.

"There was a communication between members, there was no need for this meeting because all of us have already decided to have 500,000 barrels per day from August 1," Kuwait's oil minister Sheikh Ahmad al-Fahd al-Sabah told Reuters while on a visit to South Korea.

The group, which controls around half the world's oil exports, has already raised output limits by two million bpd to 25.5 million bpd from July 1 in a bid to cool prices which last month hit a 21-year high.

Some in OPEC, worried about a price slide, called for the July meeting to review the second stage of the production increase, which will take output limits to 26 million bpd.

U.S. crude on Thursday was trading at $40.80 a barrel, within $1.50 of June's peaks.

The extra 500,000 bpd on output quotas will mean little for overall supply to the 81 million bpd world market as OPEC members are already pumping way over limits to meet strong demand growth in China and the United States.

A Reuters survey estimated OPEC production in June, excluding Iraq, at 27.2 million bpd, 3.7 million bpd above the then output ceiling of 23.5 million bpd.

The extra OPEC supply has helped replenish crude oil inventories in the United States. "As far as fundamentals there is already oversupply," Iran's OPEC governor Hossein Kazempour Ardebili told Reuters.

But stocks of refined products such as gasoline and heating oil remain below normal levels and OPEC's supply surge has left little spare capacity to cope with any disruption to supply from a major producer.

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