OPEC names hawkish leader By Associated Press, 11/14/2000

IENNA - OPEC appointed a hawkish new leader yesterday and dug in against further increases in oil production, lessening chances that energy prices might decline in coming months.

Ratifying an agreement reached Sunday, the 11-nation oil cartel credited itself for boosting output four times this year, but said all new production plans were on hold.

''The market is getting perhaps a little saturated, and there is a stock buildup which is likely to hit us in the face later in the new year,'' said the OPEC secretary-general, Rilwanu Lukman. He added that the group will weigh output cuts early next year.

The news drove oil prices higher yesterday. December futures of light, sweet crude were up 23 cents at $34.25 a barrel on the New York Mercantile Exchange, while heating oil jumped 75 cents to $1.015 per gallon.

In London, futures of North Sea Brent crude rose 41 cents to $32.43 on the International Petroleum Exchange.

Although prices have reached levels not seen in a decade, Lukman scoffed when asked if they were too high.

''Developed countries can afford these prices fairly comfortably,'' Lukman said. ''This level of price is not exorbitant, nor is it destroying the world economy.''

OPEC, which produces 40 percent of the world's oil, is scheduled to meet again on Jan. 17 to reassess prices and production. Although prices are now soaring, OPEC fears they will bottom out next spring when demand for heating oil tails off.

''The next move for them is a cut, not an increase,'' in production, said Leonidas P. Drollas, an analyst for the London-based Center for Global Energy Studies.

To guide OPEC through a potentially contentious January meeting, the cartel appointed the current OPEC president, Ali Rodriguez, as the group's new secretary-general starting Jan. 1.

Rodriguez, who is also Venezuela's oil minister, has dismissed calls for another production increase this year, and is seen as a strong leader bent on making the cartel once again more cohesive and powerful.

Drollas said the appointment signals a shift to ''old-style OPEC,'' and Jareer Elass, an analyst with Oil Navigator in Washington, called Rodriguez a ''price hawk'' for his outspoken concerns about excess production and low prices.

In his opening comments yesterday, Rodriguez attributed soaring oil prices to high gasoline taxes and a lack of refining facilities in developed countries, and not to a shortage of oil.

In fact, Rodriguez said, OPEC has done its bit by raising its official target production by 3.7 million barrels a day this year.

http://www.boston.com/dailyglobe2/319/business/OPEC_names_hawkish_leaderP.shtml

-- Martin Thompson (mthom1927@aol.com), November 14, 2000