CRUDE OIL / Update
11/28 02:24 FOCUS-OPEC's Yousfi urges immediate output cuts
OPEC's new president Youcef Yousfi has called for an immediate reduction of between one million and 1.5 million barrels per day (bpd) of oil production to rescue weak prices.
"Everybody knows that there is a big surplus of oil in the international market. In order to achieve a balance, one million to 1.5 million bpd should be withdrawn. This should be done immediately," Yousfi, who is also Algerian Energy and Mining Minister, told the London-based Arabic daily al-Hayat in remarks published on Saturday.
It was not clear whether he was calling for output cuts by all oil producers or only OPEC members.
Yousfi's remarks came after an OPEC meeting in Vienna this week failed to take any action. The gathering's aim was to rescue depressed markets.
Oil analysts say OPEC's decision to put off tough decisions on output until March might backfire on the cartel.
Yousfi, who was elected the new OPEC president during the meeting, urged swift action to save the oil market which has failed to recover despite two rounds of output cuts this year.
"We have no right to let prices fall to $10 per barrel. This is not in the interest of our country (Algeria), nor in the interest of anybody. A solution to this problem should be found immediately," he said.
"Should we have made bigger production cuts in March and June (1998), things would have been better," Yousfi said. "I hope that between now and March (1999), everyone of us will demonstrate more reason," he added.
Oil analysts and dealers were quick to downgrade price forecasts after the fractious oil cartel left the failed Vienna meeting marred by bitter squabbling.
World benchmark Brent crude oil futures clawed back 14 cents at the end of trade on Friday to stand at $11.14 a barrel.
Yousfi said output quotas, future production levels, relations with non-OPEC oil producers and the eventual return of Iraq to the organisation were issues that needed political commitments at heads of state or high ministerial levels.
"If the political level is that of heads of states, this will be welcomed. If this is not possible, then let it be at foreign ministers level or other ministers representing their countries and making a political commitment," Yousfi said.
Yousfi was among six envoys dispatched last week by Algerian President Liamine Zeroual to nine OPEC states in a last-ditch effort to raise oil prices before the two-day Vienna meeting which ended on Thursday.
The OPEC president said his talks in Kuwait, Qatar, Saudi Arabia and the United Arab Emirates included a two-phase plan to salvage declining oil prices which had hit 20-year lows.
The proposal called for coordination between states and a summit to address the decline in oil prices at a political level.
Asked if the call for a summit met with positive responses, he told the newspaper: "A number of officials understand that the problems facing OPEC should find a solution at a political level."
He said Algeria rejects current oil market conditions as they would endanger the economies of OPEC states and the fate of the cartel.
"The deep problems causing the suffering of (OPEC) member states will continue to poison OPEC and its fate for a long time," he said.
11/28 12:22 FOCUS-OPEC should cut at least 1.5mln bpd-Kuwait
Kuwait's oil minister said on Saturday that fellow OPEC members should cut their total production by at least 1.5 million barrels per day (bpd) to avoid further falls in already weak world oil prices.
"I am afraid that oil prices would deteriorate in the coming few months," Sheikh Saud Nasser al-Sabah told reporters upon returning home after an OPEC meeting in Vienna which ended indecisevely on Thursday.
"According to supply and demand now, I am afraid of more (price) deterioration...I had hoped we would come out of the Vienna (OPEC) meeting with more effective and positive accords to improve deteriorating oil prices," added Sheikh Saud.
The minister said it was possible for world oil prices to drop to the $5-$7 a barrel level. World benchmark Brent crude oil futures had clawed back 14 cents at the end of trade on Friday to stand at $11.14 a barrel.
Adjusted for inflation, prices are at 25-year lows.
"The numbers (size of needed cuts) vary...Taking into consideration the rise in Iraq's output to 2.4 million bpd from 1.6 million bpd, the cut figure they are talking about is on average 1.5 million bpd if not more," Sheikh Saud said.
OPEC ministers shied away from extending existing output cuts and instead postponed any decision on production policy until next March. "In March we will decide what to do," said OPEC Secretary-General Rilwanu Lukman after the meeting ended.
OPEC had reached two accords earlier this year to trim total output by 2.6 million bpd or some 10 percent of production but several countries desperate for cash have been cheating, according to independent monitors. Kuwait this week favoured more OPEC cuts and extending until the end of 1999 the duration of production cuts already agreed.
"But we found reservations on both options because some states did not abide by the cuts agreed upon in June, so some positions rejected any more cuts until these countries abide by earlier pledges," the Kuwaiti minister said.
According to some OPEC delegates, a dispute erupted over Iran's claim that it had agreed to cut its production by 305,000 bpd from its January 1998 OPEC quota of about 3.9 million bpd.
But other members, including OPEC heavyweight Saudi Arabia, argued that the last production cut accord was forged on the basis of February production levels when Iran's output was seen at 3.6 million bpd.
"Listen, the issue of quotas is not an issue open for discussions now. We are facing a basic problem, a crucial economic problem...We did not touch on quotas (when the last production cuts accord was reached), we discussed the size of production of states during February.
"Accordingly, the cuts we agreed on were on the basis of February, 1998, outputs levels...Iran's production was 3.6 million bpd in February and a decision was taken to cut from that amount," Sheikh Saud said.
When asked if OPEC's failure to agree on steps to boost prices was a sign that the oil group is now a marginal player on world markets, Sheikh Saud said:
"We are going to do as much as we can to keep OPEC intact. You can't compare the Organisation of Petroleum Exporting Countries (OPEC) of the 1990s with OPEC of the 1970s."
11/30 07:34 FOCUS-Oil stays low as traders rake OPEC ashes
World oil markets were back on the defensive on Monday with prices falling again after OPEC oil producers last week failed to act to alleviate a global glut.
Kuwait's Oil Minister Sheikh Saud al-Sabah said on Saturday that he feared oil prices might slump to the $5-$7 a barrel level. "I am afraid that oil prices will deteriorate in the coming months," he said on his return from Vienna.
The minister said markets required a further 1.5 million barrel a day (bpd) supply reduction.
Bulging oil inventories, a mild winter and a divided OPEC could push prices even lower with no immediate reversal in the price slump in sight, analysts said.
"There's no fear of supply shortage whatsoever," said Peter Bogin, associate director of Cambridge Energy Research in Paris. "There's nothing out there giving the slightest hint that the supply and demand balance could tighten in the near term."
Benchmark Brent futures lost 24 cents in early trade on Monday to $10.90 a barrel. Last week, prices hit an historic low of $10.65. Adjusted for inflation, prices are at 25-year lows.
Dealers were waiting for the first reaction to OPEC from the New York Mercantile Exchange which was closed on Thursday and Friday for the Thanksgiving holiday in the United States.
"When NYMEX last opened, it was a major depressant to values and people will want to see what happens there first," one said.
Traders are hard-pressed to find any good news in the oil market. Inventories are exceedingly high in the Western world and a mild start to winter in the U.S. has dampened demand, analysts said. "It's a buyers' market," Bogin said.
Last week, OPEC ministers met in Vienna but shied away from taking any action to rescue prices. Bitter rivalries between members -- most notably between Saudi Arabia, Venezuela and Iran -- have divided the once powerful cartel, analysts said.
"It looks like a disaster," said financier Robert Maguire of Morgan Stanley Dean Witter. "Everyone is hunkering down and planning for the worst."
OPEC's 11 members meet again in March to consider options which may include increasing production cuts, which now stand at 2.6 million bpd. Further weighing on the market is the fact that Iraqi exports are likely to resume shortly as oil taders have started to fix vessels to load crude after Baghdad agreed to a fifth round of the "oil-for-food" deal.
"There will be hardly any interruption of Iraqi exports," Bogin said. "In fact, you can expect Iraqi exports to start increasing in the second quarter of next year."
Analysts said only cold Arctic air moving into the Northeast United States or a major supply distruption could pull oil prices out of basement levels.
"But that's just a temporary relief," one trader said.
"It will take a combination of falling oil production and demand coming back to rescue prices, but neither of those will happen in the short term," Bogin said. |
