Purnomo cautious over oil price
Purnomo cautious over oil price
The Jakarta Post, Jakarta
President and acting secretary general of the Organization of
Petroleum Exporting Countries (OPEC) Purnomo Yusgiantoro warned
outside factors could prevent world oil prices from falling in
the third quarter.
Purnomo said riots in Nigeria and Venezuela were non-
fundamental factors that could cause oil prices to increase.
"We hope that the price will go down in the third quarter, but
that depends on non-fundamentals," Purnomo, who is also
Indonesian Minister of Energy and Mineral Resources, said before
a Cabinet meeting on Thursday.
In a meeting in Beirut on June 3, OPEC decided to increase its
crude oil output ceiling by 2.5 million barrels per day (bpd) to
26 million starting on Aug. 1 -- a bid to cool down oil prices,
which had soared to record highs of more than US$40 a barrel.
The decision came amid pressure from major industrial
countries who feared high oil prices would slow down world
economic growth.
On the bright side, Purnomo said prices could fall in the
third quarter despite a 2 million bpd increase in world demand.
OPEC increase matched that amount, he said.
The group was still studying whether to change its current
price range target of between $22 and $28 a barrel.
"I cannot say how much (the target) will change because it
will be based on U.S. dollar exchange rates and inflation rates,"
Purnomo said.
Meanwhile, in Paris, the International Energy Agency increased
on Thursday its estimate of global demand for oil this year by
470,000 barrels per day to a total of 81.1 million bpd owing
particularly to strong first-quarter demand in India and Brazil.
Demand for oil would probably total 81.1 million bpd this year
from 78.7 million bpd last year and 77.0 million bpd in 2002, the
agency said.
On stocks, the agency said: "OECD industry oil stocks closed
April at 2.473 billion barrels, up 9.0 million barrels and ending
29 million barrels above last year.
OPEC, excluding Iraq, increased its supplies of crude oil in
May by 680,000 bpd to 26.1 million and well over the offical
ceiling of 23.5 million.
Production by Iraq fell by 210,00 barrels per day in May to
2.1 million bpd because exports had been disrupted, the IEA said.
This meant that total production by OPEC rose by 470,000 bpd in
May.
Production by non-OPEC countries was steady. Overall oil
production throughout the world rose by 460,000 bpd to 82.0
million bpd.
The agency argued that high oil prices would not last.
"Producers recognise that current oil prices are too high and
that oil prices risk undermining economic development, and oil
demand, especially in developing nations.
"While the pace of economic growth remains strong, it has been
driven by a number of one-off factors including low interest rate
policies and stimulative tax cuts, major infrastructure projects
in China, depleted industrial inventories and expenditures
associated with the war on terrorism.
"In this respect, price effects have been overwhelmed by
wealth effects. This cannot last, and the move to add physical
barrels constitutes a responsible action on the art of producers
to help stabilise the market."