Duhhhhh - Oil Rises as IEA Warns of Possible 3rd-Quarter Shortage
Crude Oil Rises as IEA Warns of Possible 3rd-Quarter Shortage
New York, April 11 (Bloomberg) -- Crude oil rose more than 2
percent, gaining for the first time in four sessions, after the
International Energy Agency said OPEC will have to increase
production later this year to prevent a shortage.
The Organization of Petroleum Exporting Countries raised
output this month, causing prices to fall by almost a third from a
nine-year high in March. And while the IEA says OPEC must add
1 million barrels a day to supply in the third quarter and another
2.3 million in the final quarter to meet rising demand, the
producers say they may cut production if prices stay low.
``Is OPEC going to add another 2 million barrels a day,
especially with the market getting hammered lately? I don't think
so,' said Nauman Barakat, vice president of global energy trading
at ABN Amro Inc. in New York.
Crude oil for May delivery rose as much as 53 cents, or 2.2
percent, to $24.38 a barrel on the New York Mercantile Exchange.
Oil futures yesterday closed at the lowest price since Nov. 8,
though they still are about 46 percent higher than a year ago.
In London, Brent crude oil for May settlement rose as much as
72 cents, or 3.4 percent, to $22.02 a barrel on the International
Petroleum Exchange.
Through yesterday, oil had slumped 12 percent in New York and
17 percent in London since OPEC announced the lifting of last
year's output cuts at a meeting in Vienna on March 28.
The additional oil OPEC began pumping on April 1 will
replenish only half the inventory used during the first quarter,
according to a monthly report from the IEA, a forecasting and
advisory arm of industrialized nations. With oil use likely to
soar because of rising demand from motorists this summer, prices
could recoup some of the recent declines, analysts said.
Low Inventories
``At some point the market is going to turn around' and
begin to rally, said Lawrence Eagles, an analyst at GNI Ltd., a
brokerage in London.
World inventories probably will rise by 0.6 million barrels a
day in the second quarter, the IEA said, only enough to replace
about half the stockpiles consumed during the first three months
of 2000. Inventories in December totaled 2.48 billion barrels,
their lowest yearend level in more than a decade, the IEA has
estimated.
World oil demand averaged 76.2 million barrels a day in the
first quarter of 2000, while supply was 75.1 million, the IEA
estimated. Demand for the year will average 76.7 million barrels a
day, according to the IEA, which doesn't make forecasts for OPEC
production.
Just yesterday, OPEC president and Venezuelan oil minister
Ali Rodriguez said the producer group would cut output if an index
of seven crude oils they monitor stayed below $22 a barrel for
more than twenty days. The price stood at $20.99 a barrel
yesterday, down from $22.24 on Friday, OPEC said.
``Probably they'll try and talk the market up,' said Tom
Bentz, an analyst and broker at Paribas Futures Inc. in New York.
Even so, if prices stay low ``for any length of time, they are
going to consider cutting.'
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