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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (40352)	2/15/2000 12:55:00 PM
From: Les H	Read Replies (1) \| Respond to of 99985

OPEC needs to raise oil output 2 mln bpd in 2000, analysts say February 15, 2000 By Alex Lawler, Bridge News London--Feb 14--OPEC needs to increase its crude oil supply by at least 2 million barrels per day during 2000 to prevent a further surge in prices and to allow consumers to rebuild inventories, oil-market analysts said Monday. * * * In a turnaround from policy indications a month ago, some of OPEC's more influential members are expressing support for a raise in output once the current round of production cuts ends Mar 31. Venezuela is pushing fellow OPEC members to increase their oil supply by 1.07 million bpd when the group meets in March, a senior government official said Friday. The comments come amid mounting evidence that the oil market is tightening, and analysts contacted by Bridge were doubtful if a supply hike of 1 million bpd in 2000 would be enough to meet demand and replenish stocks. The International Energy Agency said on Friday inventories in Organization of Economic Cooperation and Development countries fell by 2.7 million bpd in December, the largest monthly decline since February 1994. "OPEC need to increase (supply) by over 2 million bpd as soon as they can," said Leo Drollas of the Center for Global Energy Studies. "One million would be too little." He commented that OPEC may stop short of raising its output by 2 million bpd for fear of prompting a sharp decline in prices similar to that which followed the group's decision to increase supply at its November 1997 meeting in Jakarta. "So you might end up with 1.5 million," said Drollas. John Toalster of SG Securities commented that if OPEC were to reverse its March 1999 output cut by raising supply by 1.7 million bpd, that measure would not calm the market for long. "OPEC needs to be producing about 29.5 million barrels per day," he said, noting this was about 3.0-3.2 million bpd above the cartel's current output level. A rise of 1.7 million bpd from current output "would leave the market tight," agreed Jeremy Elden, oil analyst at Commerzbank. An OPEC supply increase on the order of 2.0-2.5 million bpd was needed, he said. Lawrence Eagles of GNI Research said that in order for supply and demand to be in balance, OPEC output would need to be at 28.8 million bpd for the year beginning March 2000. Against current output of 26.2 million bpd, this implies OPEC needs to raise supply by 2.6 million bpd from March. "But I can't see OPEC doing that," Eagles said. "The best you're looking at in March is a rise of 1 million bpd." OPEC nations agreed to cut collective supply by a total of 4.316 million barrels per day in 1998 and 1999 to revive oil prices. Prices more than doubled in 1999 and have posted fresh 9-year highs this year. The full cartel meets to set production policy on Mar 27. Oil ministers of Saudi Arabia, Venezuela and non-OPEC Mexico are due to meet Mar 2. The 3 have spearheaded world producers' output policy over the last 2 years. End