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."