OPEC may maintain production quotas
Wednesday, January 28 2004 - 12:14 AM WIB
Purnomo's comments come after oil prices in New York last week rose to the highest since before the invasion of Iraq in March last year. Prices surged as record low temperatures in the U.S. drove up demand for heating fuel, helping to drain crude oil inventories that fell to a 28-year low this month.
OPEC, which pumps a third of the world's oil, meets on Feb. 10 in Algiers to discuss output in the three months starting April, when demand typically declines as winter ends in Europe and the U.S. OPEC is pumping as much as 1.5 million barrels a day of crude oil above existing quotas to curb rising prices, Purnomo said.
``I'm not looking at the option to change or increase the quota because I see the reality in the crude market,'' Purnomo said in an interview in Jakarta. ``With that situation it will leave us the option to just continue the present situation.''
Last week, Saudi Arabia's Oil Minister Ali al-Naimi said he wants an oil price of $25 a barrel, which is in the middle of the group's target range of $22 to $28 a barrel. The OPEC price index last traded at $30.74. The comments from OPEC's most influential member are another indication the group may not cut production next month.
Crude oil for March delivery traded at $34.48 a barrel in after-hours electronic trading on the New York Mercantile Exchange at 2:38 p.m. Jakarta time. Oil has declined 4.7 percent since the post-Iraq war high of $36.20 a barrel on Jan. 20.
The 10 members of OPEC with output quotas, all except Iraq, are producing about 26 million barrels a day of crude oil, or above their stated target of 24.5 million barrels, said Purnomo, who is also Indonesia's minister of energy and mineral resources.
Global oil demand may fall 2.5 million barrels a day in the second quarter, he said. There's also an ``overhang'' of supplies that will increase toward the second quarter, adding to a global surplus, Purnomo said.
``The OPEC 10 plus Iraq are producing at 27 million barrels per day,'' Purnomo said.
The Organization of Petroleum Exporting Countries will meet again in Vienna on March 31, when the group will review quotas using the latest figures on demand in February and March, he said. The group will also hear from Iraq on developments in repair of oil fields and output from the country, which will also influence a decision on quotas, Purnomo said.
OPEC's 10 members with quotas adjust output to keep its benchmark between $22 and $28 a barrel. OPEC would prefer a crude oil price at $25 a barrel, Purnomo said.
``The ideal crude price is at $25 a barrel, I think that's the price that we want to see,'' Purnomo said. ``We don't want the price too high, but we don't want oil prices too low.''
OPEC is concerned about the gains in crude oil prices because it adds to costs in oil-consuming countries and in turn raises prices for goods imported by oil-producing countries, which are mostly developing nations, he said.
Last month, Saudi Arabia's al-Naimi and other OPEC officials said the drop in the dollar against currencies such as the euro warranted keeping prices higher than OPEC's target range.
Some oil-producing nations have said they may price their oil in euros to maintain the purchasing power of their oil revenue.
Use of the euro as the currency to price oil may be discussed at the Feb. 10 meeting, Purnomo said.
``The comment I can give, not as OPEC president, but as Indonesian oil minister, is that every OPEC member has different sensitivity on the currency,'' Purnomo said. ``The important thing is, can our buyers accept'' the euro instead of the dollar.(*)