Global outlook worries Opec

Vienna: The Secretary-General of the Organisation of Petroleum Exporting Countries (Opec) said he was worried about the world economy, saying the rest of 2010 and first half of 2011 would be very difficult.

Abdullah Al Badri, speaking on Opec's 50th anniversary, also said the oil market seemed to be accepting oil prices of $75 to $85 a barrel and said he expected prices to stay in that range for the rest of the year.

"The remainder of this year, the first half of next year will be difficult. We have to be very careful for any action taken by anybody," Al Badri told Reuters in an interview.

"It will be a very interesting, a testing period. Either we will leave recession behind or recession will come back. I think the world economy is in need of another stimulus package."

Oil prices have spent most of the last year between $70 and $80 per barrel and benchmark US crude oil futures were trading at around $77.90 by 1500 GMT yesterday.

Al Badri's comments suggest the group is unlikely to make major changes to its output policy until the outlook becomes clearer. Opec meets on October 14.

"We are in a very critical period. We are walking a very thin line," Al Badri said of the economic outlook.

Opec has left its output ceiling unchanged for almost two years since announcing a record supply curb of 4.2 million barrels per day in December 2008 to combat lower demand and prices. Members initially met most of the reduction, but since mid-2009 production has been rising as oil prices recovered. In August, Opec met 53 per cent of its pledged output cut.

October meeting

Al Badri declined to comment on what Opec would decide when it meets in October. Still, he praised Opec's 2008 decision because it had allowed the group to be flexible.

Oil prices were unlikely to rise because of high inventory levels and were likely to remain in their present range, Al Badri said. "The fundamentals don't support a higher price. We have very high stocks."

Metals: Gold hits record

Gold hit record highs above $1,270 an ounce yesterday in its biggest one-day rally in four months, as the US dollar declined broadly after upbeat data failed to convince investors to shift into risk-linked assets.

Gold is now on course for a 15 per cent gain in 2010, fuelled largely by investor nervousness that stemmed from the fallout from the Eurozone debt crisis and from economic data that has suggested global economic growth may be losing momentum.