Riyadh, Nov 19: OPEC president Ali Rodriguez said on Sunday that global oil inventories were rising, and exporters should be ready to cut output as early as January, if decade-high prices begin to fall. Rejecting a call from the US Energy Secretary, Bill Richardson for more production from the 11-member exporters' cartel, the Venezuelan said the world's 76 million barrel per day (bpd) market was already oversupplied by 1.4 million bpd, or two per cent."If prices fall, we could cut production as soon as January," Rodriguez said at a conference of oil producer and consumer nations in the Saudi capital.Global stocks of crude oil and refined products such as gasoline were now equivalent to 80 days of demand, which Rodriguez said was an equilibrium level. "According to our projections, stocks could reach 90 days (of demand) and when this happens we expect prices to fall," said Rodriguez, who is also the Venezuelan Energy and Mines Minister.
"Right now stocks are growing. It is not being reflected in the statistics because the data only shows primary stocks. But many factories and electricity generators have built up their secondary and tertiary stocks in advance, because they were worried about a price spike," he added.
OPEC oil ministers last week decided not to raise the output again this year, despite prices well above their $22-$28 per barrel target, which consuming countries say have damaged growth and stoked inflation. Blaming factors unrelated to crude supply, such as refining bottlenecks, speculation and transport problems, the Arab-dominated cartel said it would consider the matter again in two months. "According to the market fundamentals, prices should be in the range of $22-$28 per barrel... the most important reason why (they are) not is speculation," Rodriguez said, adding that fears generated by Arab-Israeli fighting had added a premium to prices.
Mr Richardson insisted that the principal factor behind high prices was supply, and said stocks of crude oil and home heating oil were "dangerously low". Rodriguez countered that the failure of the United States to get prices down despite releasing one million bpd of emergency stocks from its Strategic Petroleum Reserve (SPR) this month showed that extra supply was not warranted.
"After nearly four million bpd of extra OPEC production, by November (with the SPR release) there have been five million bpd of supply increases this year and prices are still high.
That tells you it is not a supply problem," he said. World oil demand has risen by only 0.9 million bpd this year, and is forecast to jump by 1.9 million bpd in 2001, according to the International Energy Agency.
(Reuters)
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.