Oil traded close to a six-month high yesterday amid a faltering consensus among Gulf oil exporters on a fair price for crude.
The UAE yesterday stuck to its position that oil prices close to $70 a barrel are ideal for consumers and producers.
Oil ministers from Saudi Arabia and Qatar both said this week that crude should trade within a range of $70 to $90 a barrel, overturning a two-year consensus among Gulf states that prices should hold within a narrower band of $70 to $80.
The comments reflected new expectations within OPEC that prices will break above a relatively stable range that has been in place for 18 months, analysts said.
OPEC was comfortable with the oil price "hovering between $75 and $82" a barrel, Mohammed al Hamli, the UAE Minister of Energy, said yesterday as US crude oil traded close to a six-month high at $84.24 a barrel.
"Seventy dollars is fair for producers and consumers," Mr al Hamli said on the sidelines of the ADIPEC oil and gas conference in the capital.
But he said he was not worried about crude's rise over the past two weeks above $80 a barrel in an "oversupplied" market.
"Market forces are the reason for the rise we are seeing in the oil price," Mr al Hamli said. "We are not concerned about the price."
The price band was much narrower than one offered on Monday by Ali al Naimi, the Saudi oil minister, that immediately pushed oil prices up by almost 50 cents.
"Consumers are looking for oil prices around $70 but hopefully less than $90," Mr al Naimi told a conference in Singapore. "There's almost an anchor now for the price."
Qatar endorsed the same range on Tuesday, while Libya, which is historically considered more of a price "hawk" within OPEC, said a price of about $100 was "more comfortable for the producers".
The price of oil has stabilised at about the $75 a barrel level over the past 18 months, hitting a high of $87 in April. Prices of about $75 were endorsed last year by King Abdullah of Saudi Arabia.
This week's comments by Saudi Arabia and Qatar indicated OPEC ministers are preparing the market for a rise to $100 next year, predicted Dalton Garis, an associate professor of economics at the Petroleum Institute in Abu Dhabi.
"They are testing the water so that the market doesn't react badly when they increase prices next year," said Mr Garis, who forecast oil prices to reach $110 by the end of next year. "It is very carefully scripted."
OPEC sets production quotas for 11 of its 12 member states, which has an indirect influence on the market price for oil. OPEC officials emphasise they have no direct say over prices.
Oil prices have been supported by more than OPEC ministers' comments in recent days, said Ali Khan, the head of equity sales in the MENA region for UBS.
The impact of dollar devaluation, which makes dollar-denominated commodities such as oil cheaper, is also contributing to the rise, Mr Khan said.
"There's been a sustained weakness in the dollar and this is part of the reason [oil] is firming up," he said. "I think it's more of a short-term rise and what is really influencing oil in the short term is day-to-day fluctuations in currency."
Rising global demand predicted by OPEC, coupled with concerns about the group's spare production capacity may help push up prices in the medium term, said Amrita Sen, an oil analyst at Barclays Capital in London.
"The $90 price is rather elastic and, with OPEC's concerns about the economy, we could see this price breached next year," Ms Sen said.
* With agencies