oil banned again !

The Organization of Petroleum Exporting Countries (OPEC) is reviewing its current oil price band to adjust to the US dollar depreciation against major currencies and inflation, according to the cartel's top official.

OPEC president Purnomo Yusgiantoro was quoted Wednesday 280404 by The Jakarta Post as saying the price band of 22 US dollars to 28 dollars per barrel was deemed no longer suitable for present conditions as it had been set in 2000.

"We are studying (a new price band)," Purnomo noted, who is also Indonesian minister of energy and mineral resource.

Asked if the price band would be changed to between 25 and 32 dollars as suggested by analysts, Purnomo replied it was possible.

Purnomo could not confirm if the result of the study would be available when the oil cartel holds its next meeting in June.

"It depends on how (long) the study takes," he said.

The price band mechanism is aimed at keeping a basket of crude prices within a certain range by increasing production if the price stays above 28 dollars per barrel for 20 consecutive trading days. If the price stays below 22 dollars per barrel for 10 consecutive trading days, OPEC could cut output.

The OPEC reference basket price is the average price of seven crude oils, namely Saharan Blend (Algeria), Minas (Indonesia), Bonny Light (Nigeria), Arab Light (Saudi Arabia), Dubai (United Arab Emirates), Tia Juana Light (Venezuela) and Isthmus (Mexico).

But OPEC, which produces a third of the world's oil, has decided not to bow to the price band even though oil prices have hovered above the range since Dec. 5. The cartel argued that the soaring oil price was due to non-fundamental factors, mainly speculation by traders.