Euphoria has enveloped the crude world. Consensus seems emerging within the producers’ camp not to tinker with the markets — at least for the time being. As prices oscillate between $70-$80, most appear contented. After all, this is the price band most within in the producers’ camp have been aspiring to as fair and just.

Market volatility is at a minimum — a cause of jubilation for some. “The price is perfect,” Minister of Petroleum and Mineral Resources Ali Al-Naimi reiterated during the OAPEC (Organization of Arab Petroleum Exporting Countries) meeting last week. “The market is stable right now, volatility is at a minimum. Everything is so good now, we don’t have to think very hard,” Al-Naimi emphasized in Cairo.

And this also indicated, unusually much before the next OPEC (Organization of the Petroleum Exporting Countries) ministerial, that the producers’ group was currently inclined not to change output. “No, no, no, I don’t expect anything,” said Shukri Ghanem, the head of Libya’s National Oil Corp. often termed a hawk within the OPEC. “I think because ... of the market situation, because of the fluctuation of the market, we don’t expect any change in the quota.”

Kuwaiti Oil Minister Sheikh Ahmed Al-Abdullah Al-Sabah also seemed to indicate the group would likely hold its output targets “as is.” Algerian Oil Minister Chakib Khelil believed that it would be some time before OPEC likely considered raising its production targets. The Qatari oil minister also confirmed there would be no output increase at OPEC’s upcoming meeting later the month.

However, despite all the positive outpourings, concerns remain deep. OPEC’s efforts to bring global crude stocks down have been somewhat undermined, by weaker quota compliance by some of its members — a slippage that has become more pronounced as oil prices climbed. An OPEC report last month said the group, excluding Iraq which is not bound by quotas, produced roughly 26.5 million barrels per day in October — about 1.5 million barrels per day above their output target.

And indeed not every one is at ease with the output restraints. Venezuelan President Hugo Chavez blamed his country’s compliance with the OPEC mandated output cut for the South American nation’s unexpectedly high third-quarter economic contraction. In a second consecutive quarterly contraction that many see as recession, Venezuelan economy shrank 4.5 percent in the third quarter compared to the same period the previous year. Oil GDP too slid 9.5 percent.

Yet Chavez underlined, it would be easy to reverse the GDP trend if Venezuela were to disobey the OPEC agreements under which, he said the output had been reduced by nearly 400,000 barrels per day.

Also beneath the surface, a lingering unease with global inventory levels is also palpable. Some analysts are now starting to feel that price could fall if OPEC fails to take remedial measures, in the wake of higher inventory levels — well above historic averages. Combined with the usual the prospect of a seasonal fall in demand in the second quarter next year, this could be a disaster recipe. In addition to brimming stocks on land, a massive 165 million barrels of crude oil and refined products are also floating in vessels at sea. US petroleum inventories also continued to build as demand remained feeble.

World oil prices sank earlier the week indicating soft market demand. “The market is extremely weak,” said analyst Ellis Eckland. “Driven by physical weakness at the near term, there is potential for more weakness,” he added. Weather conditions in recent weeks have also been unexpectedly mild in the US, impacting negatively the demand.

Yet despite the weakening demand, some felt prices have been remarkably resistant, especially given historically high levels of inventory. The implication is; there is speculation in the market and OPEC should raise output levels if it wants to cap price gains that could destroy demand in a still difficult economic context.

The UAE oil minister is of the view that prices are not reflecting fundamentals and non fundamentals continued to impact the market. “It’s very interesting because we are seeing very high stocks, very high inventories on the seas and yet the price is quite comfortable,” the UAE Oil Minister Mohammed Al-Hamli said, adding the market was a little oversupplied.

Eyes also seem focused on the ongoing deliberations in Copenhagen. Any decision to drift away from fossil fuels there could easily mean disaster for single product oil producing economies, eroding the market demand.

And thus despite all the optimism, there is a sense of caution too within OPEC ranks. “It would be fool hardy for us to assume that this international economy is out of the woods and start pumping oil,” Nigerian Oil Minister Rilwanu Lukman warned.

“Until it’s fully recovered, we have to be careful (about) how much oil we put on the market,” he said. The current oil market has to be handled with “a certain amount of delicacy,” Lukman emphasized.

There are indeed threats lurking on the horizon and despite the current euphoria overlapping the markets, eyes could not be taken off them.