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Last Updated: Friday, 4 March, 2005, 20:06 GMT
Oil prices slip from recent highs
An oil refinery in Basra, Iraq
Experts believe oil prices are set to rise further this year
Oil prices have slipped from highs reached on Thursday, amid mixed comments from Opec members about the cartel's intentions.

Venezuelan President Hugo Chavez said on Friday there was no need to increase production.

Earlier, a senior Nigerian official suggested Opec would consider raising production in its March meeting.

Brent crude oil hit a record high of $53 a barrel on Thursday, but closed down 20 cents on Friday to $51.75.

Prices had risen on comments from a senior Opec official that they might hit $80 in the next two years.

Up and up?

In New York, the price of US light crude oil closed down 13 cents to $53.70 on Friday, having risen above $55 on Thursday - its highest level since November 2004.

Nigerian Presidential advisor Edmund Daukoru
Opec will discuss lifting quotas says Nigeria's Edmund Daukoru

The surge in prices on Thursday was caused by a host of factors, including a fire at three US refineries, speculative buying and continued cold weather in Europe.

On top of that, prices were buoyed by comments from Opec acting secretary general Adnan Shehab-Eldin that oil could reach $80 a barrel in the next two years. He described it as "a weak possibility", but one that "could not be ruled out".

But oil analysts increasingly view $60 a barrel as probable this year.

Some have suggested that crude oil could reach $70-$80 a barrel if a major source of supply - equivalent to 500,000 barrels a day - were to be lost.

Opec preparations

Attention is now focused on what action, if any, Opec energy ministers will take following their meeting in Iran on 16 March.

Edmund Daukoru, an adviser to Nigerian President Olusegun Obasanjo, said ministers would focus on whether output should be lifted in the second quarter.

That would be an unusual move as demand normally eases in the second quarter, the end of winter in the northern hemisphere. Opec ministers have previously suggested they might go for output cuts at the Iran meeting.

Analysts believe an increase in production is unlikely but stress that demand for oil will be tested in the coming months as the holiday season begins, particularly in the US.

The Financial Times reported that sources close to Opec believe the organisation could call an emergency meeting in the spring if prices continued to accelerate.

Opec limits

Analysts also question Opec's ability to influence prices in the event of ever-strengthening demand.

Opec, which produces about a third of the world's oil supply, was pumping at almost maximum capacity at one stage last year.

Some analysts believe Opec only has the capacity to produce an extra 1.5 million barrels a day.

Global oil prices have nearly trebled from about $20 a barrel in New York at the start of 2002, rising 18% in the last four weeks alone.

Yet, adjusted for inflation, oil prices remain far below levels reached in 1979 following the Iranian revolution.

Some of the factors which have pushed oil prices up

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