OPEC sees stable oil prices until the end of 2003
Friday, October 31 2003 - 01:03 AM WIB
Silva-Calderon told a press conference on Thursday that in regard to prices, "we expect A cut by the Organization of Petroleum Exporting Countries (OPEC) of 900,000 barrels per day (bpd) from its current quota of 25.4 million bpd is to take effect on November 1.
OPEC had ordered the cut in September to keep prices from falling with Iraq increasing its oil exports and non-OPEC oil production running high.
Iraq is a member of OPEC but not part of its quota system.
OPEC had increased production ahead of the Iraqi war that began in March in order to still fears of shortages and keep the oil market stable.
The cartel said in September that its cut should be seen in the same spirit of trying to calm volatility in markets.
Silva-Calderon said OPEC would evaluate how the cut starting in November affected oil prices before deciding at a meeting in Vienna on December 4 whether to adjust OPEC production.
Leo Drollas, an analyst from the Centre for Global Energy Studies (CGES) in London, said OPEC wanted to maintain revenue and "if they want to keep that level (of prices), they will have to cut production at the beginning of next year, maybe as early as the first quarter, depending on the weather."
Oil prices are currently at the high end of OPEC's target range of 22-28 dollars a barrel.
In London, prices dipped Thursday in the wake of weekly data for U.S. energy stockpiles that revealed larger than expected inventories of crude and heating oil.
The price of benchmark Brent North Sea crude oil for delivery in December fell 46 cents per barrel to 26.98 dollars in early deals, having dropped by around 60 cents the previous day.
Some analysts have said high oil prices are cutting into world economic recovery but Silva Calderon insisted that "this level of price doesn't damage the world economy."
He said that in fact there were signs "the economy is improving in some regions."
"The market is more than well supplied," he said, adding that prices were higher than they should be based on supply-and-demand due to concern raised by "extraordinary events," such as continuing uncertainty in Iraq.
Silva-Calderon said that in fact in 2004 the global oil market could be awash with crude, putting downward pressure on prices -- a development OPEC would need to watch closely.
"Our estimate is that in the coming year there will be a lot of oil on the market," he said.
He predicted that in 2004 there would be "more oil on the market than demand" and said OPEC would adjust production if necessary although he refused to speculate what exactly OPEC might do
Silva-Calderon said "OPEC needs the cooperation of non-OPEC states in the task of controlling the market" and that he expected this to happen.(*)