Oil price jumps as OPEC sees year long freeze: Report
Saturday, March 2 2002 - 03:05 AM WIB
International benchmark Brent crude oil traded 55 cents higher at $US21.88 a barrel in London, off a session high of $US22.25 a barrel, taking the week's cumulative gain to more than seven per cent.
US crude futures hit a four-month high of $US22.80 before pulling back to $US22.37, up 63 cents.
OPEC Secretary-General Ali Rodriguez said he saw the cartel maintaining stringent output curbs for the rest of this year and that OPEC wanted prices at least another 10 per cent above current levels.
Paul Horsnell of investment bank JP Morgan said: "I would take that statement as distinctly bullish because there is a danger that OPEC will allow incremental production to come on slowly and the market is going to get tighter.
"But if our forecasts are anything approaching correct, this market will go into overdrive if they don't raise production in the second half of the year," he added.
The Organisation of the Petroleum Exporting Countries, which controls more than half of world exports, joined forces with five other exporters in January to cut supply and stem a slide in prices that spelled the end of a two-year boom.
It was the cartel's fourth consecutive output reduction in 12 months, taking OPEC's market share to its lowest level since the 1980s.
Speaking from the group's Vienna headquarters, Rodriguez said he expected OPEC to maintain its current production ceiling irrespective of whether or not rival oil power Russia extends its curbs to the second quarter.
Rodriguez, a former Venezuelan oil minister, is due to meet top Russian officials in Moscow next Monday and Tuesday to lobby for an extension ahead of OPEC's March 15 ministerial meeting.
"I am confident we will come to an agreement," he said.
Rodriguez also said he expected OPEC's reference basket of crude oils, which stood at $US20.03 on Thursday, to rise above $US22 per barrel by the end of the year.
Prices crashed through the bottom of OPEC's $US22-$US28 per barrel target range in September, when the attacks on the United States exacerbated a downturn in oil demand.
But Rodriguez said OPEC could expect to see a return to the desired range when demand recovers.
Cheaper oil prices have helped world economies recover from recession but have put a squeeze on OPEC member country budgets, triggering a currency devaluation in Latin American producer Venezuela.
Sentiment on the futures markets was further buoyed by production data from Norway and Russia, which are both cooperating with OPEC to curb output.
Norway said it had reduced output by 160,000 barrels per day (bpd) in January to 3.09 million barrels per day.
The reduction was more than the 150,000 bpd Norway had promised to OPEC, but the absolute level was still 70,000 bpd above its agreed limit because output rose sharply in December.
The Norwegian oil ministry reaffirmed its commitment to the 3.02 million barrel per day average output target for the first quarter, and said output would fall further in February and March.
Russia kept a lid on crude exports in February, unofficial data released on Friday showed.
Moscow held supplies below last year's peak and allowed it to claim that it has met at least part of its pledge to co-operate with OPEC, industry sources and traders said. (*)