FOCUS-Oil makes giant leap up,Clinton warns OPECgreenspun.com : LUSENET : TB2K spinoff uncensored : One Thread
FOCUS-Oil makes giant leap up,Clinton warns OPEC
(Adds late gains, closing prices) By William Maclean
LONDON, March 7 (Reuters) - Rampant oil markets hurdled to fresh nine-year peaks on Tuesday, prompting U.S. President Bill Clinton to warn OPEC that high prices were not in its long-term interests.
The giant gains pushed U.S. light crude above $34 a barrel for the first time since late 1990 and gave North Sea benchmark Brent its largest one-day rise since OPEC's current round of output cuts began in March 1998.
The rally coincided with a fresh flurry of oil diplomacy among OPEC producers at odds over output policy and drew an appeal from the West's energy watchdog for more cartel output to end a supply shortage.
"We need a lot more oil on the market and we need it soon," said Robert Priddle, executive director of the International Energy Agency, a body set up in 1974 to protect the interests of oil consuming countries. "There's not much time to waste."
"Sure, I want oil prices to go down some," Clinton told reporters at a White House news conference.
"But the producing countries should want them to go down some too."
He said high prices would eventually dampen global demand, hitting OPEC revenues, or encourage non-OPEC producers unhindered by supply curbs to eat into cartel market share.
U.S. light crude on the New York Mercantile Exchange last traded $1.97 a barrel higher at $34.15.
In London, Brent leapt first above $30 and then $31 for the first time since the 1991 Gulf crisis, gaining $2.32 to a high of $31.95, more than three times its price during a supply glut in early 1999. It last traded $2.23 higher at $31.86.
Priddle told a conference in the capital of the United Arab Emirates that without more oil it would be impossible to rebuild 2000 fuel stocks even to the levels of 1999.
He said producers should restore output to levels preceding deep supply curbs. Asked if that meant OPEC should hike output by about three million barrels per day -- about double what some in OPEC are contemplating -- he replied "Perhaps".
Prices have roared higher in the past year thanks to output cuts orchestrated by the Organisation of the Petroleum Exporting Countries and non-OPEC producers such as Mexico.
The cuts have severely drained oil inventories and created worries of a gasoline supply shortage in the United States just ahead of the summer driving season.
The United States, which uses a fifth of the world's oil, has repeatedly urged OPEC to raise output substantially when it meets in Vienna on March 27 to set output levels from April 1.
SAUDI ARABIA, IRAN TO HOLD TALKS
But OPEC's divisions on output policy have persisted and the perception of its disarray is helping drive prices higher.
Oil ministers from OPEC giants Saudi Arabia and Iran will hold crucial oil talks on the market in Riyadh on Wednesday.
Iranian Oil Minister Bijan Zanganeh and a team of Iranian oil officials would meet Saudi Oil Minister Ali al-Naimi in the Saudi capital Riyadh, they said.
There have increasingly been public differences between the two countries about how to cool the market, with Saudi Arabia favouring a supply increase immediately after the curbs expire and price hawk Iran favouring no change.
Zanganeh also plans to visit OPEC's UAE and Oman for talks starting on Saturday and is expected to maintain his opposition to a sudden production hike, diplomatic sources said.
Disagreements became more pronounced on Monday when Zanganeh reiterated there was no reason to raise output in April.
Later, Iran said jointly with Libya and Algeria that OPEC could maintain curbs after March because demand would fall by over three million barrels per day (bpd) in the second quarter.
That ran counter to the position adopted by Saudi Arabia, Venezuela and Mexico last week which recognised a need to lift output but withheld details on the size and timing of the rise.
American lawmakers are clamouring for the administration to cut off foreign aid, arms sales and take other tough action against OPEC to prod the cartel into pumping more oil.
But the White House has repeatedly said it prefers to first try diplomatic overtures.
The Clinton administration said it was stepping up energy diplomacy with hastily arranged meetings with oil ministers from the Gulf state of Qatar, whose oil minister Abdullah al-Attiyah is OPEC president, and OPEC heavyweight Venezuela.
Clinton is considering the possible release of oil from the nation's emergency stockpile to ease prices, but it is not under active consideration at this time, a White House spokesman said.
Brokers said prices were supported more immediately by North Sea supply disruptions and stoppages at Royal Dutch/Shell's Bonny and Forcados terminals in OPEC member Nigeria.
Fed Governor Edward Gramlich said the U.S. Federal Reserve Bank is obviously concerned about higher oil prices, even though oil plays less of a role in the U.S. economy than it did 30 years ago.
"It is true that oil is a lot less important now than it was in the 70s," he told reporters. "But it's not unimportant. So we are obviously concerned about this."
Prices in dollars per barrel:
Mar 7 Mar 6
IPE April Brent 31.86 29.63
NYMEX April light crude 34.15 31.18
-- Possible Impact (email@example.com), March 07, 2000
Lets just bomb the sh*t outta somebody!!
-- Porky (firstname.lastname@example.orgD), March 07, 2000.