RI sees average Q1 oil prices at US$28 a barrel
Saturday, January 6 2001 - 05:00 AM WIB
Minister of energy and mineral resources Purnomo Yusgiantoro yesterday said he expected world oil prices to stand at US$28/barrel in the first quarter of 2001.
"I think oil prices will reach an average of US$28 per barrel in the first quarter due to the cut in OPEC production this month," Purnomo told the press following a visit to the West Java capital of Bandung.
In the meantime, the cartel's Vienna secretariat was quoted as saying by Reuters on Friday that the price of an OPEC basket of crudes would move further inside OPEC's preferred range of US$22 - 28 on Thursday, when it rose to US$23.25 a barrel, up from US$22.61 on Wednesday.
Under an OPEC price stability mechanism, if the basket price stays below US$22 for 10 consecutive working days, crude production would be cut by 500,000 barrels a day in an effort at stabilizing prices.
There is now insufficient time for the mechanism to be triggered before OPEC meets on January 17 to decide production policy.
Meanwhile, US oil prices extended their recovery Thursday as the OPEC cartel gave out fresh signals that it would make a substantial cut in crude output when it meets later this month.
Renewed confidence in US demand following the Federal Reserve's surprise Wednesday interest rate cut is helping oil's convalescence from a December slump that took some US$10, or nearly 30%, from near-ten-year-high prices.
Prices advanced again Thursday after OPEC Secretary - General, Venezuela's Ali Rodriguez as quoted by Reuters said it was "probable" the group would decide to cut production when it meets on January 17 in Vienna.
This echoed remarks Thursday by an official from leading world producer Saudi Arabia that consensus was emerging within OPEC to curb output by 1.5 million barrels per day (bpd), or more than 5%.
Rodriguez dismissed concern among some traders that oil's recent rebound - bolstered by a continued shortfall in Iraqi supplies - might make OPEC nervous about going through with a big output cut.
"In recent days, the price of oil has recovered slightly, but there is still a build in inventories, which is worrying all members of OPEC," said Rodriguez.
Outgoing US Energy Secretary Bill Richardson this weekend will try to convince Rodriguez that OPEC supply quotas - lifted last year by 3.2 million bpd in a bid to stem soaring prices - should be maintained
unchanged for a while yet.
But Rodriguez said that recent price falls had caused anxiety among producing nations, which are eager to avoid a repeat of a 1998 price collapse that scarred their economies.
US heating oil prices on Thursday succumbed to fresh five month lows below 84 cents a gallon, hit by forecasts of milder weather in the Midwest and Plains regions and growing confidence in winter supply. (*)