Crude oil rises as IEA warns of possible shortages

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Bloomberg Energy

Thu, 11 May 2000, 1:54pm EDT

05/11 07:35 Crude Oil Rises as IEA Warns of Possible Shortages in 2nd Half

By Vladimir Todres

London, May 11 (Bloomberg) -- Crude oil rose 1 percent after the International Energy Agency warned that oil shortages are possible in the autumn and winter if top exporters don't boost output for a second time this year.

Worldwide oil demand may exceed supply by 220,000 barrels a day in the third quarter and 1.72 million in the last three months of the year as demand rises, said the IEA, an energy adviser to 23 top oil-consuming nations.

``The report quite possibly has sparked a rally'' in the price today, said Rob Cole, managing director at Trafalgar Commodities Ltd.

Brent crude oil for June settlement rose as much as 26 cents, or 1 percent, to $26.68 a barrel on London's International Petroleum Exchange. Crude oil for June delivery on the New York Mercantile Exchange was up 13 cents at $28.23 a barrel in electronic trading.

Higher supplies from the Organization of Petroleum Exporting Countries now and a seasonal decline in second-quarter demand may prevent the group from boosting output in the summer, the IEA said. Still, the agency expects demand to pick up later in the year, first from motorists during the summer travel season and then from homeowners for heating as colder weather arrives.

Worldwide, consumers this year will burn 76.5 million barrels of oil a day, up 2 percent from 1999, the agency said.

More Supplies

While the IEA calls for more supplies, OPEC officials say they have no intention of increasing production again after boosting quotas at their March meeting to reduce prices from nine- year highs.

That agreement meant OPEC, which pumps two of every five barrels of the world's oil, produced 27.78 million barrels a day in April, 840,000 barrels a day more than in March, the IEA said.

OPEC President Ali Rodriguez said yesterday the group doesn't plan to boost output in July. Rodriguez, who spoke before a meeting with Saudi Arabian Oil Minister Ali al-Naimi and his Mexican colleague, Luis Tellez, said OPEC will keep production quotas at their current levels after it meets June 21 in Vienna. The three ministers didn't release any statement after they met.

The price for Brent crude oil is down about 20 percent since OPEC at the end of March agreed to boost production. Prices dipped below $22 a barrel in April and have regained about $4.50 a barrel since then.

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-- (v@vvv.hmm), May 11, 2000.

Energy futures

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Maybe the swing production capacity of OPEC is a little overstated?

-- - (x@xxx.com), May 11, 2000.