OPEC likely to stay hand, oil cuts achieving aim

VIENNA, Mar 13 (Reuters) OPEC oil supply cuts are achieving their goal of balancing the market and steadying prices, ministers and officials said on Tuesday, shrugging off the International Energy Agency's call for more OPEC oil.

The Organization of the Petroleum Exporting Countries will meet here on Thursday to set output. Ministers have signalled no change after agreeing to curb supplies by a total 1.7 million barrels per day, or six percent, at their last two meetings.

An equity sell-off that has spilled over into oil may play on some ministers' minds ahead of the talks, however. Investor concerns about global financial and economic stability bubbled to the surface again on Tuesday with disappointing U.S. retail sales data adding to worries about risky mortgages.

Oil fell more than a dollar to below at one point.

''It is unlikely they will change production,'' OPEC Secretary General Abdullah al-Badri told Reuters.

That view was echoed on Tuesday by Iran, Libya and Kuwait.

OPEC officials said the emphasis was likely to be on ensuring the agreed cuts are put in place. Industry analysts estimate that OPEC, which pumps over a third of the world's oil, has made good roughly one million bpd of the pledged reductions.

The International Energy Agency and some analysts believe OPEC may have gone too far with its supply curbs.

According to the IEA, adviser to 26 industrialised countries, OECD countries could be headed for the largest first quarter drop in oil stocks for over 10 years.

''Stock trends and prices are signalling that higher OPEC exports will be needed in the months ahead,'' the IEA said in its monthly Oil Market Report, released on Tuesday.

Analysts at Barclays Capital agreed: ''The risk is that OPEC has now taken too much oil off the market.'' FAVOURED PRICE Even the most conservative projection, OPEC's own, puts demand for OPEC oil at above 30 million bpd. That number includes Iraq and new member Angola, both of which are exempt from output restrictions for the time being.

A majority in OPEC, including top oil exporter Saudi Arabia, have said -- barring a price collapse -- they prefer to stick with an output target of 25.8 million bpd for the other 10.

''We should wait before making any decision about changing production,'' the head of Libya's delegation Shokri Ghanem told Reuters. ''The market is in a balanced situation.'' OPEC's head of research, Hasan Qabazard, told Kuwait's state news agency KUNA the organization had created a market balance ''that is favourable to all oil producers''.

OPEC argues oil prices must be sufficiently high to encourage investment without choking economic growth in consumer nations.

The organization scrupulously avoids setting a price target but some ministers have said they believe is a reasonable level for U.S. crude oil. Others, notably Iran and Venezuela, set the bar higher.

''I think is a good deal for everybody - for producers and consumers,'' Qatari Oil Minister Abdullah al-Attiyah said recently.

Oil is well down on its July 2006 peak of .40, but it is still three times the price at the start of 2002 when Asian demand kicked in.

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