OPEC determined to cut oil output<\/p>\n
Fitri Wulandari, The Jakarta Post, Jakarta<\/p>\n
The Organization of Petroleum Exporting Countries (OPEC) will
\nnot change its plan of cutting crude oil output on April 1,
\ndespite the rising price of oil.<\/p>\n
"We will stick to our February decision (to slash the output).
\nBut we are reviewing how long the price has been above US$28 (per
\nbarrel)," OPEC president Purnomo Yusgiantoro, who is also
\nIndonesia's Minister of Energy and Mineral Resources, said on
\nMonday.<\/p>\n
Purnomo said the current high price for oil was not caused by
\n"fundamental" factors, such as the imbalance of supply and
\ndemand, but non-fundamental ones, such as speculation by traders
\nand concerns over unrest in Venezuela.<\/p>\n
OPEC is to meet again at the end of March in Vienna.<\/p>\n
OPEC, which produces a third of the world's oil, decided on
\nFeb. 10 to reduce official output limits by one million barrels
\nper day (bpd), from 24.5 million bpd to 23.5 million bpd on April
\n1. This was an attempt to prevent the price from falling when oil
\ndemand is expected to falter in the second quarter of the year as
\nthe European winter comes to an end.<\/p>\n
However, oil prices have been climbing since February.<\/p>\n
OPEC's basket price on March 4 was US$32.05 per barrel. OPEC's
\nbasket price is an index of seven oil grades namely Saharan Blend
\n(Algeria), Minas (Indonesia), Bonny Light (Nigeria), Arab Light
\n(Saudi Arabia), Dubai (United Arab Emirates), Tia Juana Light
\n(Venezuela) and Isthmus (Mexico).<\/p>\n
OPEC had said it would keep its basket price in the US$22-$28
\nrange. If the price of oil stayed above US$28 per barrel for 20
\nconsecutive trading days, it would raise production by 50,000
\nbarrels a day. If the price stayed below $22 for 10 consecutive
\ntrading days, it would cut output by a similar amount.<\/p>\n
In London, oil prices held at post-Iraq war highs on Monday as
\nlow U.S. gasoline inventories and unrest in OPEC member Venezuela
\nheightened fears over supplies for the U.S. summer driving
\ndemand, according to Reuters.<\/p>\n
London Brent crude was down five cents at $33.30 a barrel,
\nwithin 30 cents of Friday's new 12-month peak, which was the
\nhighest level since just before last year's U.S.-led invasion of
\nIraq. U.S. light crude was down nine cents at $37.17 a barrel.<\/p>\n
Low stocks of crude and gasoline in the United States have
\nraised fears of a supply crunch in the summer holiday season,
\nwhen demand for motor fuel peaks.<\/p>\n
Violent street protests by foes of President Hugo Chavez who
\nare demanding a referendum on his rule have raised fears of a
\npossible repeat of a two-month oil strike at PDVSA last year that
\nbriefly shut most of Venezuela's oil production. Venezuela is the
\nworld's fifth-largest oil exporter and a major supplier to the
\nUnited States.<\/p>\n
"With U.S. stocks already so tight, the mere possibility of a
\nrepeat of the strikes in Venezuela that paralyzed the oil
\nindustry has the attention of even the most complacent market
\nwatcher," said Washington-based analysts PFC Energy.<\/p>\n
State oil company Petroleos de Venezuela (PDVSA), which
\nspearheaded last year's strike, is less likely to be at the
\nforefront this time, analysts said.<\/p>\n
"Chavez effectively purged PDVSA, leaving his supporters
\nfirmly in control, and the opposition remains too fragmented to
\neffectively stage a repeat of the work stoppages seen during the
\nlast strike," the PFC report said.<\/p>\n
The International Energy Agency (IEA), which advises 26
\nnations on energy policy and security, criticized OPEC on Monday,
\nsaying markets should be left to decide price and stock levels
\nand that the current rally was hurting developing countries.<\/p>\n
"We are a little perplexed by the idea of a cut on April 1 as
\nit really won't take effect in the market until some time in May
\nor June, and we are going into the driving season when refineries
\nare running flat out to meet gasoline demand," said William
\nRamsay, IEA deputy executive director.<\/p>",
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