OPEC remains concerned at falling oil price
OPEC remains concerned at falling oil price
Fitri Wulandari, The Jakarta Post, Jakarta
The Organization of Petroleum Exporting Countries (OPEC)
remains concerned at the likelihood of a declining oil price in
the second quarter of this year when demand for heating fuel
falls off.
OPEC President Purnomo Yusgiantoro said demand for the fuel
was expected to drop by 2.2 million barrels per day (bpd) to 2.4
million bpd.
"If (the oil price drop) materializes, we shall take measures
to keep the price at US$22 to $28 at the end of March," Purnomo,
who is also Indonesia's Minister of Energy and Mineral Resources,
told a media conference on Tuesday.
OPEC, which produces a third of the world's oil, is scheduled
to meet on March 31 in Vienna to discuss production policy.
OPEC ministers decided on Feb. 10 to reduce official output
limits by one million bpd from 24.5 million bpd to 23.5 million
bpd, starting from April 1, excluding Iraq. It aims to avoid a
price collapse in the second quarter when demand for oil falters
as winter comes to an end in the northern hemisphere.
Oil prices continued to climb on concern at tight gasoline
supply in the U.S. ahead of summer demand.
On Monday, U.S. Light crude for April traded up 19 U.S. cents
at $34.54, Reuters reported. Brent Crude for April on the
International Petroleum Exchange in London climbed 14 U.S. cents
to $30.95.
Purnomo said the rising oil price was partly due to a longer
winter in the northern hemisphere, which had prompted stronger
demand.
Security disturbances in Iraq had also contributed to the high
price.
"Security problems in Iraq have disturbed the country's oil
production. It is not clear when Iraq will achieve its 3 million
bpd target," Purnomo said.
Iraq currently produces 2.1 million bpd.
Purnomo said OPEC members could still produce oil above quota
as long as oil prices remained above $28 per barrel for two more
consecutive weeks.
"OPEC's basket price is still above $28 per barrel, and it
means (if it stays above $28 per barrel), for two consecutive
weeks OPEC (members) would be allowed to produce above the quota
to bring the price below $28 per barrel," Purnomo said.
OPEC's reference crude oil price, or basket of crude oil, was
at $30.17 per barrel on Friday. The price has been above $28 per
barrel since December 2003. OPECs basket of crude is an index of
seven oil grades.
Purnomo said OPEC would seek measures to keep its basket price
within the price band $22 to $28 per barrel.
The price band mechanism aims at maintaining the oil price
range by raising production by 500,000 barrels per day if the
basket price stays above $28 barrel per day for 20 consecutive
trading days. OPEC could lower output by a similar amount if the
price stayed below $22 per barrel for 10 consecutive trading
days.