UPDATE 2-Saudi's Naimi shifts price range up to $70-$90

Mon Nov 1, 2010 8:44pm IST

* Oil market climbs following Naimi comments

* Naimi says current price zone here for now

* Saudi Arabia set $75 a barrel target two years ago

(Adds background, detail from speech)

By Simon Webb and Jennifer Tan

SINGAPORE, Nov 1 (Reuters) - An oil price between $70 and $90 a barrel is a comfortable range for consumers, Saudi Oil Minister Ali al-Naimi said on Monday, marking a step up from his earlier statements $70-to-$80 was ideal.

International benchmark U.S. crude CLc1 has been rangebound for much of this year, but prices have rallied over the last month, largely in response to a weak U.S. dollar.

"Consumers are looking for oil prices around $70, but hopefully less than $90," Naimi said in comments following a speech in Singapore.

"There's almost an anchor now for the price."

Oil prices rallied following Naimi's comments and were trading at $83.49, up $2.06 a barrel by 1452 GMT.

"Naimi's comment is probably the most convincing reason," said Carsten Fritsch of Commerzbank, with reference to Monday's price rise.

"It gives an assurance that the Saudis won't do anything to prevent a further rise above $80 per barrel ... It is a green light for investors (in oil)."

Until Monday, Naimi had stood by comment $70-to-$80 was the perfect market range, either side of the $75 identified by Saudi Arabia, the world's leading oil exporter, as a target price two years ago in November 2008.

FED AS PRICE DRIVER

Dollar-denominated commodities have risen as the U.S. currency has weakened in anticipation the U.S. Federal Reserve at a meeting on Tuesday and Wednesday will opt for a new round of quantitative easing.

When oil prices were racing towards their all-time high of nearly $150 a barrel hit in July 2008, Saudi Arabia assured the market it would produce more oil if demand justified it.

This rally is more modest and Naimi said there was no cause for alarm.

"We're in a very comfortable zone. I believe this zone should continue for some time. I would not predict for how long," he said.

"We are in a very decent environment right now for price. If I can be audacious, I would say producers, consumers and companies are all happy with this price."

In his speech prior to Monday's comment, Naimi said energy demand would grow by 40 percent within the next two decades, with Asia accounting for 60 percent of the increase between now and 2030.

He stood by previous comment fossil fuels would meet 85 percent of the growth over the next 20 years and said Saudi Arabia was well placed to rise to the challenge.

"As the world's leading supplier of oil with 264 billion barrels of proven oil reserves, at current production levels the kingdom could continue to supply crude oil for another 80 years even if we never found another barrel," he said. (additional reporting by Christopher Johnson in London; editing by James Jukwey)

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