Sept. 9 (Bloomberg) -- Saudi Arabia's Oil Minister Ali al- Naimi said the crude market is ``well balanced'' and inventories are in a ``healthy position,'' suggesting OPEC's biggest member will fend off calls from Iran and Libya for lower output.

``We have worked very hard since June's meeting to bring prices to where they are now,'' al-Naimi said upon arrival in Vienna for a meeting of the Organization of Petroleum Exporting Countries tonight. ``We have been very successful.''

New York crude for October delivery fell as much as 2.3 percent to $103.85 a barrel and traded at $104.26 at 9:08 a.m. local time. The opinion of Saudi Arabia, OPEC's most influential producer, differs from that of Iran and Libya, who want production to be trimmed back to official quota levels to prevent oil prices slipping below $100 a barrel because they say the market is oversupplied.

``From what we have heard they will come short of cutting production,'' said Eugen Weinberg, a commodity analyst at Commerzbank AG in Frankfurt. ``They are very satisfied with what is happening, the oil price is still above $100.''

Oil prices are down 29 percent from a record $147.27 in July. Most analysts polled by Bloomberg expect OPEC, the supplier of more than 40 percent of the world's oil, to keep quotas unchanged and production near record levels for the fourth quarter.

No Purpose

``A production cut would not serve much of a purpose,'' OPEC President Chakib Khelil told Bloomberg Television in an interview today, since it wouldn't halt the decline in prices. ``Rather, it will damage the advantage the organization has got by making a positive gesture toward consuming countries.''

The OPEC members with quotas produced about 592,000 barrels a day more than their official limit of 29.673 million last month, according to Bloomberg estimates. Iraq has no quota. Output from all 13 members slipped 200,000 barrels a day from July's record.

Most of the increase in OPEC production in the past few months has come from Saudi Arabia, the world's largest oil producer, which pledged to raise output by 500,000 barrels a day through June and July to calm prices. It hosted an emergency meeting of global oil producers and consumers in Jeddah in June to discuss how to stabilize markets. Saudi King Abdullah said oil prices above $100 a barrel were too high in an interview with Italian newspaper La Repubblica on July 16.

Spurs Inflation

High oil prices are raising fuel costs for motorists, airlines and other businesses, spurring inflation worldwide in consuming and producing nations.

Asked whether he would recommend that the OPEC keep output at current levels, al-Naimi said today: ``We will do what I have said before, if we have customers we will satisfy their demand.''

Venezuelan Oil and Energy Minister Rafael Ramirez said OPEC should keep output unchanged and reduce oversupply.

Ramirez called for stricter compliance with quotas to counter a potential gain in stockpiles in the first quarter. ``History has shown that if inventories rise above normal levels, we will have a price collapse,'' he told reporters in Vienna today.

Mohammad Ali Khatibi, Iran's OPEC governor, urged OPEC members to trim output.

`Previous Commitments'

``I hope that in OPEC's meeting this evening the ceiling of members' output is put back to their previous commitments to balance the world's crude market,'' he told the state-run Iranian Students News Agency today.

OPEC's so-called Ministerial Monitoring Committee met yesterday without making any recommendations on production targets, according to Nigerian Minister of Petroleum H. Odein Ajumogobia.

The committee, which includes OPEC Secretary-General Abdalla El-Badri and oil ministers from Iran, Kuwait and Nigeria, often recommends a course of action for the producer group.

Khelil, who is also Algeria's oil minister, predicts an oversupply of oil at the end of the year, and in early 2009, in the region of 500,000 to 1.5 million barrels. He said there probably won't be any need for OPEC to meet again between now and December.

``The best approach is to have consultations'' rather than another formal meeting, he said in today's interview.

Oil ministers from OPEC members Kuwait, Nigeria and Ecuador have said this week that the group shouldn't alter production.

To contact the reporter on this story: Maher Chmaytelli in Vienna at mchmaytelli@bloomberg.net

Last Updated: September 9, 2008 09:17 EDT