Oil cuts aimed at cutting US oil stocks -Venezuela
Thursday April 8, 12:53 pm Eastern Time
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CARACAS, April 8 (Reuters) - Venezuelan Energy and Mines Minister Ali Rodriguez said worldwide cuts in oil production were aimed at bringing U.S. inventories down to the equivalent of 80 days of demand in the world's biggest oil consumer.
As well as reducing output to remedy a collapse in oil prices, he said the Organization of Petroleum Exporting Countries (OPEC) should closely monitor markets and devise a mechanism to reactivate shut-in capacity when prices recover.
''The initial target was 80 days of inventories according to the studies made here and in OPEC. That is a level that will not lead to excessive prices, but which will maintain an acceptable level,'' Rodriguez told Reuters in an interview.
''If there is a reduction, there should be a mechanism by which each country would know how much it can increase its production...that is why monitoring is so important,'' he added.
Oil stocks in the United States on March 26 stood at 85.5 days, according to data supplied by the U.S. Department of Energy.
Rodriguez last month joined a third round of cuts designed to lift oil prices off their lowest levels in over a decade. But he said he was mindful of the mistakes of the 1970s and 1980s, when prices soared and then collapsed despite severe reductions in OPEC output.
''I am not one of those dogmatists who prostrate themselves before production cuts, nor among those who prostrate themselves before the expansion policy. Both policies have shown major failures,'' Rodriguez said, referring to the previous administration's strategy of rapid output growth.
''Everything points to the fact that neither extreme is right and both policies have led to the same result: an abrupt fall in prices.''
It was not OPEC that established a floor to prices, but marginal production, which is mostly located in the United States and began to close when prices slumped last year, Rodriguez said.
The United States consumes about 19 million barrels of oil daily, of which about 10 million barrels are imported. Its total oil inventories stood at 1.6 billion barrels last Friday, according to U.S. government data.
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