IMF Outlook Sees Even Higher Oil Prices : LUSENET : TB2K spinoff uncensored : One Thread

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Paper: IMF Outlook Sees Higher Oil Prices

BERLIN (Reuters) - The International Monetary Fund's latest World Economic Outlook, due for release next week, expects oil prices to continue to rise in coming months, the German edition of the Financial Times reported on Sunday.

The IMF expects oil prices to increase because of the approaching winter, low reserves and strong growth in the global economy, the newspaper said citing a draft copy of the report.

Crude oil and heating oil reserves had not been filled to the same extent during the summer as they usually would be because of high prices.

This would increase pressure on existing reserves during the winter, the Financial Times Deutschland said in an advance copy of an article from its Monday edition.

In the short term, extra requirements would rise to five million barrels of crude oil per day, while the OPEC (news - web sites) states have only agreed to produce three million extra barrels a day.

Oil consuming nations are trying to persuade OPEC to produce more oil as they fear prices near 10-year highs could harm economic growth.

In the medium term high oil prices would lead to an increase in supply because connection costs at storage facilities had fallen, the report said.

OPEC's ministers lifted production by 800,000 barrels to 3.3 million barrels daily earlier this month.

The report said even if crude prices were to stabilize at $32 a barrel, which is lower than last week's closing price of $33.90 a barrel, then oil consuming nations would have to pay $140 billion more for imported oil this year than in 1999.

This would amount to 0.4 percent of gross domestic product of oil importing nations, the Financial Times Deutschland said.

German Chancellor Gerhard Schroeder said during a visit to Spain at the weekend that the Group of Seven industrial nations would tackle oil prices at its summit in Prague next weekend.

``We will try together, perhaps via (the EU council of finance ministers) Ecofin but also via G7, to develop ideas which will lead to a process in which oil production will be adjusted to the needs of the global economy,'' Schroeder told reporters.

-- Carl Jenkins (, September 17, 2000

-- Newsman (, September 17, 2000

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