Oil prices stay high as OPEC, buyers wrangle
Oil prices stay high as OPEC, buyers wrangle
LONDON (Reuters): Oil held at lofty levels near 10-year highs on Thursday amid discord between OPEC exporters enjoying windfall revenues and importers hit by mounting fuel costs.
Brent blend futures were eight cents better at US$30.77 a barrel while U.S. light crude was unchanged at $32.02.
An OPEC official said the Saudi-dominated exporter cartel would act if prices stayed at current levels but he added the group saw no shortage of crude on international markets.
"We don't see a real shortage of crude. We think that the fundamentals of the market are okay," Shokri Ghanem, acting Secretary-General of the Organization of the Petroleum Exporting Countries, told an industry conference in Vienna.
"If this price level continues then of course OPEC has to do something," he added, referring a rally drawing expressions of concern from the United States and the European Union.
Prices have risen by 15 percent this month alone, at one point hitting their strongest levels for a decade, powered by fears of a shortage of U.S. heating oil in the northern hemisphere winter.
Heating oil price are at their highest since the 1991 Gulf War on reports that U.S. supplies have fallen by more than 39 per cent nationwide for the year.
Extra OPEC oil had been expected to start replenishing lowly stockpiles in the West but data this week showed inventories still in decline.
Ghanem added OPEC did not want to disrupt the world economy but he believed the recent run-up was due to speculation and OPEC could not react simply on fluctuations in industry stocks.
President Bill Clinton told reporters on Wednesday he would be happier with prices in the range $20-$25 and said OPEC would suffer if costly crude caused recession among consuming nations.
But in a mounting standoff, leading U.S. supplier Venezuela said consumer governments were to blame for high prices through market speculation, high taxes and costly environmental rules.
A price band mechanism informally agreed by OPEC members in June calls for a 500,000 bpd increase if the price of an OPEC basket of seven crudes stays above a $22-$28 band for 20 working days. So far, it has been above the range continuously since August 14.
But OPEC, which controls the bulk of internationally traded supplies, has adopted a cautious stance and was unlikely to take action on the current price spike ahead of its next policy meeting on September 10.
Apart from kingpin member, Saudi Arabia, which has kept mum so far, other members are seen to have little significant spare capacity to raise output.
Indonesian new oil minister Purnomo Yusgiantoro told Reuters on Thursday that it was having trouble meeting its given production quota. Indonesia is OPEC's only Asian member.