To help lower global oil prices and meet demand, OPEC is raising its oil output by 2 million barrels per day, effective July 1, from 23.5 million, with another 500,000 bpd increase due in August. The cartel meets on July 21 to review the second stage of the increase.

"There is greater (oil) production than a year ago, and we have more inventory than we do a year ago, but the world is demanding more," Abraham said.

U.S. oil prices have fallen about $5 a barrel since the beginning of June, even after rising more than $1 yesterday. Crude stocks are 22 million barrels higher than one year ago.

OPEC provides about half of global oil trade. Oil use in 2004 is expected to grow at 2.9 percent, the fastest rate in 23 years, according to the International Energy Agency.

The secretary said it was important to recognize that OPEC actually was pumping more oil than its official quota limits.

NO DELAY FILLING OIL STOCKPILE

Separately, Abraham said the administration has no plan to delay shipments to the U.S. emergency oil stockpile this autumn to help build heating oil inventories before winter.

The Energy Department has scheduled to add 5.6 million barrels of oil to the strategic reserve in October, a month before colder weather usually arrives in the Northeast - the largest U.S. heating oil market.

"We've made no fundamental change to our philosophy to fill the (Strategic Petroleum Reserve) to the 700 (million barrel) range by next year," Abraham said.

He also said the government will not tap the oil stockpile despite current high gasoline prices, but said the administration is ready to open the spigots in case of a supply emergency. "We are prepared to, determined to and won't hesitate to use the reserve if we ever have to (but) it would take a major, significant disruption in supply to cause us to use the (reserve) or consider deferring" oil deliveries, Abraham said.

The stockpile, which was created by Congress in the mid-1970s after the Arab oil embargo, now contains about 662 million barrels of crude in underground salt caverns at four sites in Louisiana and Texas.

SAUDIS SEE OIL PRICES AS FAIR

Abraham would not comment on remarks from top world oil exporter Saudi Arabia that oil prices were at fair levels.

"I believe the current prices are fair and there is no reason to take any measures either to decrease or increase the (kingdom's oil) production," Saudi Oil Minister Ali al-Naimi told reporters earlier in the day in Riyadh.

"Frankly I'm not prepared to accept that as either his official position or as anything else," Abraham said, referring Naimi's comments.

Naimi's remarks, along with an unexpected weekly drawdown in U.S. commercial oil stockpiles, sent U.S. crude prices up over $1 per barrel Wednesday after hitting a two-month low.

Despite recent terror attacks in Saudi Arabia, Abraham said he believes the kingdom's oil production "is secure."

In other remarks during the interview, Abraham said:

* The Bush administration still hopes to broker a deal over a long-delayed energy bill, but called it "completely untenable" that the White House should be blamed if Congress fails to act.

* The administration expects U.S. oil companies will invest in Libya now that the United States has resumed relations with the North African nation.

* No disruptions in U.S. oil imports are anticipated as a result of tough new security regulations for ships and ports that take effect on July 1. (Additional reporting by Paul Merolli)