Oil Exporters Talk of Continued Restraint in Production
London, Oct. 23 (Bloomberg) -- After slashing output this
year and watching the price of crude oil double, several of the
world's top oil exporters now say they may extend self-imposed
limits on production to keep prices high.
Oil officials from Venezuela and Mexico, the world's fifth-
and sixth-largest oil producers, and Kuwait, the 12th-largest,
this week all indicated the Organization of Petroleum Exporting
Countries would consider production limits after the current
restrictions expire in March.
Their comments could reflect concern that plentiful oil
supplies aren't shrinking fast enough, analysts said. More
likely, though, after crude prices dropped 17 percent from this
year's high, exporters want to remind traders of OPEC's
commitment to holding down supplies.
``If they were to signal an increase in output, the market
is still sufficiently anxious about inventories that prices would
again take a dive,' said Jurjen Lunshof, an analyst at Credit
Lyonnais Securities.
Just a month ago, OPEC said it would reduce daily oil output
by 1.7 million barrels, or about 2.3 percent of world supplies,
until April. Four non-OPEC nations, including Mexico and Norway,
also promised to restrain output. OPEC hasn't fully met its goal,
but it has made more than 90 percent of the planned cuts.
Higher And Higher
This week, oil officials from Venezuela and Kuwait, two of
the 11-member OPEC, said the cutbacks may need to last longer. In
addition, Mexico said it hoped OPEC would extend the agreement,
even though Brent crude oil in London has risen close to $23 a
barrel from a 12-year low of $9.55 in December.
A Kuwaiti official on Wednesday said he expected the limits
to be extended through to the end of June. April would be a bad
month to boost production because rising temperatures in the
Northern Hemisphere spring usually weaken demand for heating oil,
the unidentified official said, according to Kuwait's official
KUNA news agency.
On Friday, Venezuelan Deputy Energy and Mines Minister
Alvaro Silva Calderon said the group hadn't decided what its next
policy would be, adding current quotas would be extended ``if
need be.'
OPEC's success in raising the price of oil this year comes
after a series of failures in 1998, when agreements to curb
output were ignored by some of the group's biggest producers. As
supply overwhelmed demand and the price of oil fell, OPEC members
saw their combined annual earnings decline.
Producers have said they want to see global inventories
reduced and the average oil price over a year increase to more
than $18 a barrel before they consider raising output again. The
average price of Brent crude oil over the past year is $15.56 a
barrel.
And while prices have risen, ample supplies remain. The
International Energy Agency last month estimated that some 170
million more barrels of oil than normal sat in storage tanks
worldwide, enough to meet more than two days of use.
Saudi Oil Minister Ali Naimi said Wednesday OPEC's top
producer has ``absolutely no plans' to raise oil output before
the end of March because world inventories are still too high.
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