Big stocks make oil prices stagnate

Big stocks make oil prices stagnate

JAKARTA (JP): Director General for Oil and Natural Gas
Suyitno Patmosukismo said yesterday large stocks held by major
consumer countries were weakening the oil market despite the
coming of winter.

Patmosukismo told newsmen that international oil prices have
stagnated at a range of US$16-$17 per barrel over the last few
weeks.

"This is unusual in that the prices even declined slightly
from $17 in November to $16.29 last month in view of the onset of
the winter season which was supposed to spur demand," he noted.

Patmosukismo, who is also the chairman of OPEC's Council of
Governors, blamed the persistently weak oil market on stock
releases by the major consuming countries.

"The major consumers, instead of increasing purchases, have
been drawing down on their stocks, thereby depressing the
market," he added.

He also blamed the less severe than expected winter weather
as another reason behind the weak oil market.

International analysts have predicted that the world oil
demand will increase by one million barrels a day during the
winter season.

Nonetheless, Patmosukismo did not expect the oil market to
remain weak for a long time because the major consumers will have
to rebuild their strategic stocks to a level equivalent to at
least two months' utilization.

"I therefore expect the oil market to recover within the
near future," he predicted.

The president of the state-owned Pertamina oil company,
Faisal Abda'oe, shared the view that the international oil market
will soon pick up again.

Abda'oe saw the releases by the major consumers simply as a
temporary measure to bring down their stocks to a normal level.

"But anyway, the current level of oil prices will not affect
the government's target of oil tax receipts, which are based on
an average price of $16 per barrel.

"The average export prices of our crude oil even exceeded
$16 during the April-December, 1994 period," Abda'oe pointed out.
(vin)