In a telephone interview, Mohammad Ali Khatibi told Reuters: "There is some oversupply in the market but it cannot damage the market. It can be absorbed into stocks."
Oil demand growth in 2010 of around 1.2 million barrels per day would mostly come in the second half of the year, as the pace of global economic recovery quickens, he said. But higher demand later would not necessarily mean OPEC would raise supply as non-OPEC producers could pump more, Khatibi said.
Khatibi declined to comment on what decision he thought OPEC ministers would take when they meet in Vienna on March 17.
But even as winter ends and the northern hemisphere consumes less oil, there was little reason to believe that stocks would rise any more than they typically do during the second quarter, Khatibi said.
"Some refiners might store it for a while and then consume it at higher margins," Khatibi said. "Some traders might put it in storage and sell it in the second half for higher margins, like they did last year."
Oil storage levels rose in 2008-2009 as the recession ate into demand faster than producers could cut supply, leading traders to fill tanks on land and to keep millions of barrels of oil floating in ships at sea.
Many turned a profit by selling the oil at a higher price later.
Storage levels have fallen over winter, but at 58.1 days of forward cover in developed countries, remain above the around 52 days that OPEC considers comfortable. But stock levels have failed to depress oil prices, easing concern among producers about brimming inventories.
The expanding economy would combine with seasonal energy consumption patterns to push demand higher later in the year, he added.
Ministers would have to look at supply from producers outside of OPEC to see whether that would be enough to meet the higher demand, he said. They would also look at increased supply of liquids produced as a by-product of gas, he added.
"We'd have to see all of this additional production before we decide if the market is balanced or not," he said.