OPEC to Focus on Inventories

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day September 3 12:52 PM ET OPEC to Focus on Inventories

CARACAS (Reuters) - Venezuelan OPEC President Ali Rodriguez said the cartel will focus on crude oil inventories when considering a production increase to calm runaway petroleum prices at a ministerial meeting in Vienna.

In an interview published in El Universal newspaper Sunday, the Venezuelan oil minister said high oil prices were due not solely to rising demand from strong world economic growth.

Rodriguez also blamed international futures markets speculation, high taxes imposed by consumer governments and bottlenecks in refining in the West.

U.S. benchmark crude oil futures in New York closed at $33.40 a barrel Friday, just below their highest level since the 1991 Gulf War.

Asked if a production increase was necessary at OPEC's September 10 ministerial meeting, Rodriguez said ``We have to focus on inventories, because experience has taught us that if stocks rise above 82 days supply it will cause a price fall, because speculators are watching these supplies just as closely as we are.''

Crude inventories were currently equivalent to just over 80 days of consumption, and were growing, Rodriguez said.

``If we continue to increase them they could rise as high as 87 days,'' the OPEC president said, noting that stock levels of 86 days in 1998 had provoked a slump in international prices.

Rodriguez, the leading proponent of an OPEC price band to stabilize oil prices between $22 to $28 a barrel, did not mention the mechanism, which could trigger an automatic production increase ahead of the Vienna meeting. Under the terms of this price band, unofficially agreed to at a March ministerial meeting, the cartel would increase output by 500,000 barrels a day, equivalent to 0.7 percent of world demand, if its export basket price remains over $28 per barrel for 20 days.

The basket broke above $28 a barrel on August 14, and stood at $31.71 per barrel Thursday. Unless the OPEC basket price falls below $28 a barrel, it would trigger the band mechanism on September 8.

Meanwhile, Rodriguez urged Western nations to turn their attention to an acute shortage of refining capacity, which had helped to drive gasoline prices sharply higher this year.

``We have a terrible bottleneck in refining and that is going to be a recurrent problem in the coming years, which is going to get more serious all the time,'' Rodriguez said.

Rodriguez also questioned figures showing a fall in distillate stocks in recent weeks, which he said he had discussed with Mexican Energy Minister Luis Tellez.

``It interested us a great deal the fall in distillate stocks when consumption of distillates continues to be low. It appears that all this is apart of the manipulation of figures,'' he said.

http://dailynews.yahoo.com/h/nm/20000903/bs/oil_opec_dc_1.html

-- Martin Thompson (mthom1927@aol.com), September 03, 2000

Answers

``We have a terrible bottleneck in refining and that is going to be a recurrent problem in the coming years, which is going to get more serious all the time,'' Rodriguez said.

OR

``It interested us a great deal the fall in distillate stocks when consumption of distillates continues to be low. It appears that all this is apart of the manipulation of figures,'' he said.

Well which is it?

And why the bottleneck? What's going on?

-- (perry@ofuzzy1.com), September 03, 2000.


What's with this 80 inventory baloney? Where are these elusive inventories? In this country we're at a 24-year low, Europe is bleeding, and Asia is hurting with the big curtailment in Indonesian oil deliveries.

Has anybody looked under the rug? These OPEC politicians sound like our own--especially Al Gore. Lots of smoke and mirrors, and an all-encompassing let's fool everybody we can strategy.

-- Uncle Fred (dogboy45@bigfoot.com), September 04, 2000.


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