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.