But, "production level should be driven by market forces rather than by artificial decisions made not based on the market," he said, referring to OPEC's price mechanism. According to the mechanism, OPEC, in theory, could raise production by 500,000 b/d if its basket price stays above $28/bbl for 20 consecutive trading days. OPEC's basket of seven crudes Thursday was at $30.41/bbl--the 24th consecutive trading day it has exceeded OPEC's target range of $22-28/bbl. OPEC will hold a meeting Feb 10 in Algiers to discuss output quotas and is expected to hold its quotas on concerns of lower demand and rising production from Iraq and non-OPEC members.

Abraham said he was "surprised" when some OPEC officials said Monday that the current crude prices are much lower than they appear to be due to the recent depreciation of the dollar, on which the oil is priced. On Wednesday, the euro hit a record high of 1.2813 against the dollar in New York. "They have never suggested that they should have lower prices of oil than their price band when the value of the dollar was stronger," Abraham said. Abraham added he does not believe that the current high crude prices can be justified amid a falling dollar, as some senior OPEC officials have claimed. "One does not have to be an energy secretary to compare the price of oil today with what has been in recent years and recent months...It has been consistently higher" regardless of the weak dollar, Abraham said. He arrived in Japan Thursday where he discussed Japan-US cooperation in research and development of hydrogen and fuel cell technologies with his Japanese counterpart.

This story was first published in Platts Global Alert.