The head of Saudi Arabia's oil operation said Tuesday global oil supplies are "well-balanced," and the oil market breathed a sigh of relief.

Ali Al-Naimi, Saudi Arabia's oil minister, in Vienna for OPEC's September meeting, added that he sees healthy inventories, Bloomberg News reported Tuesday.

The above comments were enough to convince energy traders and economists that OPEC will maintain current production levels when it meets later today, and oil fell $1.99 to $104.35 per barrel in early Tuesday trading.

OPEC a bigger concern than Hurricane Ike

Economist Peter Dawson told BloggingStocks Tuesday analysts and traders are certainly watching Hurricane Ike, a Category 1 hurricane that's likely to strengthen and hit Texas' oil-rig-laden coastline, but the larger concern remains OPEC.

"Of course, all eyes are on Hurricane Ike, which could cause loss of life and also significantly damage to property and oil facilities, but oil industry preparation has advanced and we're much better able to cope with these storms than even 10 years ago," Dawson said. "In comparison, an OPEC production cut is something no one can prepare for."

Saudi Arabian Oil Minister Ali al-Naimi said a summit of oil producers, consumers, companies and other energy officials in his country this month will find a solution to "stabilize" oil prices he argues are "unjustified" by supply/demand fundamentals, Bloomberg News reported Friday.

Oil traded lower early Friday on al-Naimi's summit comments, falling $2.30 to $134.44 per barrel.

Saudi Arabia has invited the United States, United Kingdom, China, Germany, India, and Japan, among other nations, as well as dozens of energy officials and analysts to the June 22 meeting in Jeddah, Reuters reported Friday.

Saudi Arabia, the world's top oil exporter and holder of the largest proved oil reserves, is an influential member of OPEC. Throughout oil's record price rise, OPEC has argued that the oil market is well supplied, with no shortages, and that other factors - - the weak dollar, geopolitical tensions, and above all, investor speculation -- not supply -- has kept prices higher than what the supply/demand balance would dictate.

Others disagree, arguing that global oil inventories, which are in the lower-half of a 5-year average, and the small safety cushion -- the difference between daily global oil supply and demand -- are two objective data points that explain high prices. Oil hit a record high of $139.12 per barrel on June 6, 2008. Oil is up more than 100% in 2008 and more than 400% since 2000.

Saudi Arabia's Oil Minister Ali al-Naimi said Monday oil prices are unlikely to fall below $60 per barrel, Bloomberg News reported Monday.

Ali al-Naimi, head of the nation with the world's largest oil reserves and highest oil exports, did not indicate whether OPEC was leaning toward maintaining current production quotas in the face of oil's most-recent price rise. Oil has increased about $15 in the past two weeks to more than $100 per barrel, as concerns about underperforming U.S. stocks due to the sluggish U.S. economy, and inflation fears, have prompted investors to pile into oil as an investment and as an inflation hedge. Oil closed Wednesday up 61 cents to $102.45 per barrel.

Last week, OPEC President and Algerian Oil Minister Chakib Khelil told reporters in Algiers that "we don't expect to put more oil in the market."

New oil floor: $60?

Al-Naimi told Bloomberg News yesterday that obtaining energy from harder-to-refine sources, such as tar sands and alternative fuels, costs about $60-70 per barrel "and, therefore, a line has been drawn below which the price cannot fall."