Top world oil exporter Saudi Arabia, which has boosted supply to cool prices, believes the market has now fallen to a fair value and sees no reason to change its production level, Saudi Oil Minister Ali al-Naimi said on Wednesday.
"I believe the current prices are fair and there is no reason to take any measures either to decrease or increase the production," he told reporters in Riyadh.
Saudi Arabia has been producing 9.1 million barrels per day since the start of June in a bid to cool 21-year high oil prices.
The higher output has helped replenish crude inventories and pulled U.S. prices down more than $6 or 15 percent from early June's peak at $42.45 a barrel. U.S. crude closed $1.39 higher at $37.05 a barrel Wednesday.
Surging prices drew urgent calls from consuming nations for extra supply from OPEC producers to stop higher energy costs damaging economic growth.
"The market view now of supplies, and the reassurance of their continuity, has relaxed the market. It believes the fundamentals of supply and demand are valid and for this reason the price has gone down," al-Naimi was later quoted as saying by the official Saudi Press Agency.
OPEC officially targets a $22-28 a barrel range for its reference basket of crude oils but the basket price has been well above the range for the whole of this year. The basket was last valued at $32.50 a barrel.
Saudi sources have said the kingdom will continue to pump 9.1 million barrels per day in July, well above its official OPEC production quota of 8.288 million barrels per day.
OPEC meets in three weeks time to review a planned 500,000 barrels per day increase in the cartel's formal 25.5 million barrels per day production target from August.
Asked if it was still necessary for OPEC producers to implement the increase in the light of the recent price fall, Naimi said: "We will reply to this when we meet on July 21st."
OPEC president Purnomo Yusgiantoro said on Wednesday the cartel was not concerned about the drop in prices. "The price is gradually dropping but it is not drastic," Purnomo, who is also Indonesian oil minister, told reporters in Jakarta.
Chinese efforts to slow runaway economic growth have helped pull oil prices lower, while in Iraq, this week's handover of power has fed optimism of a slowdown in repeated sabotage attacks that have restricted Iraqi oil exports.
Analysts warn a major attack on oil facilities could quickly push prices back up again as the higher Saudi supply has reduced the world's spare production capacity.