OPEC tips oil prices to tumble
By Grace Nirang
New York
August 16, 2004
www.theage.com.au
Crude oil prices, which rose above $US46 a barrel on Friday, may fall to $US30 a barrel next year as concerns about supply disruptions in Iraq, Russia and Venezuela ease and producers boost output, says OPEC president Purnomo Yusgiantoro.
Oil prices in New York have set records in 10 of the past 11 trading days because of concern yesterday's referendum in Venezuela on Hugo Chavez's presidency will disrupt shipments to the US fighting in Iraq. There is also concern that a legal battle between Russia and the OAO Yukos Oil Company may further limit supply.
"There is a psychological premium in the market of $US16 a barrel because of Yukos, Iraq and Venezuela," Mr Purnomo told reporters in Jakarta. "If the premium disappears, the crude oil price will stay at about $US30 a barrel next year."
Crude oil for September delivery rose $US1.08, or 2.4 per cent, to close at $US46.58 a barrel on the New York Mercantile Exchange on Friday, the highest since oil began trading in New York in 1983.
Venezuela, the third-biggest oil producer in the Organisation of Petroleum Exporting Countries after Saudi Arabia and Iran, is seeking to avoid a repeat of last year when oil output was slashed after opponents of Mr Chavez went on a nationwide strike to force the former paratrooper from office.
OPEC was pumping 30 million barrels of crude oil a day to stem the rally in prices, Mr Purnomo said. He said the increase in prices had nothing to do with a shortage of oil.
"The world is already oversupplied by between 1.5 and 2 million barrels a day, but the price is still high," he said. "The problem is not based on the supply-demand balance."
OPEC, which pumps more than a third of the world's oil, has the capacity to add a further 2 million barrels of crude oil to the market each day. Members of the producer group would discuss output at a meeting in Vienna on September 15, Mr Purnomo said.
Oil prices will probably rise further this week, a Bloomberg survey of traders and analysts on Thursday showed. Twenty-eight of 49 survey respondents, or 57 per cent, predicted the rally would continue. Ten expected prices to fall and 11 said oil futures would be little changed.
Rafael Ramirez, Venezuela's energy and mines minister, said on Friday that oil prices would surge if Mr Chavez was recalled in the referendum. Mr Ramirez said there was no way the President could lose the vote unless there was fraud, but polls suggest a close race.
Last week Felix Rodriguez, vice-president of Venezuela's state oil company Petroleos de Venezuela, said the company had ordered extra security at its installations to guard against possible violence.
Petroleos de Venezuela's output plunged last year because of the nationwide strike. Production fell to less than 50,000 barrels a day during the height of the work stoppage, down from pre-strike levels of 3.2 million barrels a day.
Output has yet to recover to pre-strike levels, according to former employees of the company and international agencies, which peg output at 2.5 million to 2.6 million barrels a day. Mr Rodriguez said output was closer to 3.1 million barrels a day.
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OPEC tips oil prices to tumbleBy Grace Nirang New YorkAugust 16,...
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