OPEC's Rodriguez tells French paper oil supply exceeds demand

By Bridge News Paris--Nov. 17

Ali Rodriguez, OPEC's new secretary-general, was quoted by French daily La Tribune on Thursday as saying that the current price of oil does not reflect the fact that there is a supply surplus of about 1.4 million barrels a day on the world market. By increasing output "OPEC has made enormous efforts" to stabilize prices, he said, adding that only joint action between consumers and producers can have a decisive influence on the market.

Rodriguez told La Tribune that a new mechanism should be put in place that would provide a reference for the price of oil. The current high price of oil is not explicable in terms of current market fundamentals, he said. It is more to do with the sharp cut in refining capacity in the United States. Capacity there can no longer meet domestic demand.

As U.S. stocks fall, speculators are artificially boosting oil prices. Meanwhile in Europe the problem is not refining capacity but high taxes, he added.

Rodriguez said his task is to continue to modernize OPEC. To work towards more stable oil prices, "a battery of regulatory mechanisms must be put in place," he said.

Specifically, he said, OPEC intends to reinforce and institutionalize the organization's capacity to research market trends.

"We are considering the establishment of a commission of experts to create a 'benchmark' where you can find OPEC's export levels alongside those of Mexico and Norway which would help bring prices closer to the reality of physical markets."

http://www.petroleumworld.com/story1400.htm

-- Martin Thompson (mthom1927@aol.com), November 17, 2000