OPEC Says More April Oil To Accelerate Stk Builds
by Shai Oster
Fri, Apr 15, 2005 20:34 GMT
LONDON - OPEC is on track to boost its oil output in April to
accelerate crude stock builds, the producer group's acting Secretary General Adnan Shihab-Eldin said Friday.
Production will near 30 million barrels a day, allowing for bigger cushion of crude inventories in big oil consuming countries, Shihab-Eldin told Dow Jones Newswires in an interview.
That would be some 240,000 barrels a day extra over the Organization of Petroleum Exporting Countries' March production estimate, a little under 1% more crude.
But oil prices won't crash despite signs of sluggish U.S. and
European economic growth and fatter inventories, the group's top economist said.
"We're not expecting a collapse, but we're keeping a careful watch on it," Shihab-Eldin said.
There are no indications high prices have hurt the world economy, but OPEC is on alert for a global slowdown as economies plateau, he said.
A quota hike of 500,000 barrels a day on top of a current production ceiling shared by OPEC's 10 members of 27.5 million barrels a day is still on the group's agenda, he said.
But it would only be added if benchmark crude prices soar back toward their all-time highs, he said.
Crude oil futures in New York tumbled about a dollar at Friday's open, about 14% lower than the nominal record high of $58.28 a barrel hit two weeks ago on easing supply fears and bearish economic data.
Treasury Secretary John Snow warned Friday that high energy prices and weak growth in Europe and Japan were taking a toll on the U.S. economy.
"We have been looking very carefully at the price rise and so far, the impact has been modest, if any," Shihab-Eldin said.
He cautioned there could be a lag between high crude prices and their economic impact.
OPEC is producing about 2 million barrels a day more than current demand, he said, citing OPEC production in March at 29.76 million barrels a day and the implied need for its crude at 27.7 million barrels a day.
About 40% of that extra crude will fatten inventories in the key consuming countries of the Organization for Economic Co-operation and Development, he said.
Rising inventories will take pressure off markets. Benchmark oil prices for prompt delivery are lower than back months and this is encouraging refiners to build stocks ahead of the typical surge in demand for transportation and heating fuels in the second half of the year.
"We will continue to build more in the second quarter," Shihab-Eldin said. "Prices rose because markets were worried about supplies in the winter. Stocks should be well positioned in the fourth quarter."
Days of forward demand cover have risen to 52, a level OPEC is
comfortable with, he said. But if they soar to 55 days or more amid weakening oil prices, the group may consider cutting supplies, he added.
Elsewhere, OPEC is considering setting its new target price band somewhere below $50 a barrel for Nymex crude, the Secretary General said in the interview..
The group is also expanding capacity, with another 5 million barrels a day of production coming on stream by 2010, he said.
Added to a similar increase from non-OPEC producers, that would more than match forecasts of demand growing 6 million barrels a day in the same period.
"Even if not all the plans materialize, what one gets is a
comfortable picture," he said. OPEC's spare capacity fell to under 5% last winter, but will double by the end of the year, the group said in its monthly report published Friday.
© 2005 Dow Jones Newswires. |
