Oil prices surge $1 per barrel

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1:31 PM - Sep 20, 2000 EDT Oil prices surge $1 per barrel

By Pro Farmer Editors

Agence France-Presse // By Daniel Rook

LONDON -- Oil prices surged again in London on Wednesday despite fresh indications from OPEC that it was ready to pump more oil in October if prices continued to rise.

The benchmark Brent North Sea crude oil for November delivery rose by over a dollar to 34.81 dollars a barrel before falling back to 34.44 dollars in afternoon trading, against 33.63 dollars at the close on Tuesday.

Meanwhile in Paris, French government spokesman Jean-Jack Queyranne said that France would use this weekend's Group of Seven (G7) meeting in Prague to propose an informal summit between the European Union, the United States and oil producing countries to discuss the high price of oil.

But the market shrugged at new promises from Organisation of Petroleum Exporting Countries (OPEC) Secretary General Rilwanu Lukman in Jakarta on Wednesday to increase supplies if necessary.

"If during the month of October prices remain stubbornly high, then we will do something in October, if necessary," Lukman told a press conference.

"We stand ready if necessary to put an extra 500,000 barrels within October, " he said.

His comments followed remarks made in Caracas on Tuesday by the current OPEC president, Venezuelan Energy Minister Ali Rodriguez, suggesting that the group could pour another 500,000 barrels per day of oil into the marketplace in the next 20 days if prices do not fall.

"Clearly the impression that is being given ... is that they want to judge the market when the extra oil has been released -- and that is not until October," said the GNI brokerage.

The market held its breath after the US government said on Tuesday it was considering pumping oil from the US Strategic Petroleum Reserve or taking other "appropriate" steps to deal with the surge in crude oil prices.

But President Clinton appeared reluctant to tap the reserves, suggesting it would take him "a few more days" to gauge the impact of a recent OPEC decision to hike output.

Republican presidential nominee George W. Bush eased the pressure on Clinton to release the reserves when he said that he would not do so unless it was a real emergency, analysts said.

Of further concern to both the US government and the oil market was the prospect that Iraq might cut production as a result of its territorial dispute with neighbouring Kuwait.

Washington was unlikely to pump oil from its reserves in case Iraq subsequently cut its own production and thereby prompted a real emergency, analysts said.

"The last thing they want to do is to be seen to be caving into political pressure, but risking the security of the United States," said Lawrence Eagles at the GNI brokerage.

The market, meanwhile, remained on alert that an important source of oil might be withdrawn.

"The market has woken up to the fact that now that OPEC is close to full capacity, (Iraqi President) Saddam Hussein basically controls the oil market," Eagles told AFP. "If he decides, as he did last last November, to suspend exports there is very little anyone can do bar a strategic reserve sale."

Meanwhile, fresh warnings that high oil prices could stunt the growth of many industrialised countries were made by the managing director of the International Monetary Fund, Horst Koehler, who said in Prague on Wednesday that the recent surge in oil prices had "cast a new shadow" over prospects for growth of the world economy.

And the debate on whether sky-high oil prices would stoke inflation was reopened by an expert at the UN Conference on Trade and Development (UNCTAD) on Tuesday.

Jan Kregel, UNCTAD's high-level expert on international finance and one of the authors of the 2000 Trade and Development report, published in Geneva on Tuesday, said the jump in oil prices was unlikely to cause an inflationary spiral.

http://www.agweb.com/news/news.cfm?id=12312&breakingnews=1



-- Martin Thompson (mthom1927@aol.com), September 20, 2000


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