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To: Saulamanca who wrote (58862)	9/11/2000 5:44:12 PM
From: Saulamanca	Read Replies (1) \| Respond to of 99985

OPEC Pact Fails to Calm Oil Price Scare By Richard Mably VIENNA (Reuters) - Oil consumers were left fretting on Monday that worse may still be to come for fuel bills this winter after OPEC's weekend pact releasing more supplies failed to contain an explosive rally in world crude prices. Dealers worried about low inventories sent oil racing to highs not seen since the 1990 Gulf crisis despite Sunday's OPEC deal that raises cartel output by three percent. OPEC had been hoping its extra oil would quell an international outcry over high energy bills amid worries that accelerated inflation could dent world economic growth. But cartel ministers admitted on Monday that prices now could be running out of control. ``We are approaching a crisis of great proportions because oil production capacity is reaching its limit,'' said OPEC's President, Venezuelan Oil Minister Ali Rodriguez. ``I don't think prices are going to get there now but they could rise to $40 depending on the winter,'' he added. ``This is all OPEC can do,'' said Iranian Oil Minister Bijan Zanganeh. ``All the tools are not in our hands.'' The Organization of the Petroleum Exporting Countries lifted output by 800,000 barrels daily to 26.2 million barrels a day. OPEC ally Mexico said it would add another 200,000 barrels daily later this year. Brent blend futures rose 84 cents to $33.60. U.S. crude was catapulted to $35.14, up $1.51 a barrel. ``This just goes to show how little power OPEC really has over oil prices at the moment,'' said Gary Ross of New York's Petroleum Industry Research Associates. ``There's a feeling that whatever OPEC does there's not going to be enough oil this winter,'' added Nigel Saperia of European trading house Glencore. Saudi Unhappy, U.S. May Use Reserves Saudi Oil Minister Ali al-Naimi said he was ``not happy'' with the market's reaction. ``We said before we intend to bring the price down and we will bring it down. We want the price at $25 a barrel,'' he told OPEC lobby reporters. If prices fail to react favorably soon for consumers the United States could use its huge Strategic Petroleum Reserve for the first time since the Gulf crisis. ``We see a better than 50 percent chance of Washington releasing oil from the SPR,'' said Ross. The OPEC pact, effective from October 1, will depend largely on the group's leading producer Saudi Arabia to provide extra crude. Most others in the cartel already are pumping to capacity. ``The question remains, exactly how much fresh oil is going be to put in the market and how fast it will come,'' said Klaus Rehaag, head of the International Energy Agency's oil market division in Paris. ``Given what they're already producing it's not necessarily going to put a huge amount of fresh oil into the market.'' Western consuming nations gave OPEC's deal a cautious welcome. A White House spokesman said: ``Whether this will be effective and will be enough to stabilize the market remains to be seen.'' Germany's Deputy Economics Minister Siegmar Mosdorf called the extra supply ``a step in the right direction,'' but warned that crude needed to fall to nearer $25 before his country's economy would benefit. India, a large importer of Middle East OPEC crude, said it would have liked more. Japan said it remained worried that America's low heating oil stocks would keep prices on the boil. ``Whether this will be effective remains to be seen in view of very low heating oil stocks in the United States heading into the winter season,'' said Keiichiro Okabe, president of the Petroleum Association of Japan. British Pumps Run Dry OPEC's call on importing nations to help ease the burden on consumers by reducing taxes have fallen mostly on deaf ears. In Europe, where tax and duty make petrol and diesel among the world's dearest, fuel protest blockades that started last week in France rippled into Belgium and Britain. Five of nine British refineries were blocked by pickets and oil companies said thousands of petrol stations had run dry. British Prime Minister Tony Blair said: ``The sensible way, indeed the only right way, to deal with this problem is to put pressure on OPEC itself, not to let them off the hook by caving into blockades here.'' Producers will review output again at an extraordinary meeting on November 12 but have very little room now to maneuver on more supply. Saudi Arabia's official OPEC quota rises 260,000 bpd to 8.51 million barrels a day. A large dose of leakage already has it pumping well in excess of that allocation but insiders said Riyadh has promised the United States it would take supply above nine million bpd. ``At the end of the day it's all about what Saudi Arabia will actually produce,'' said Ross. OPEC Secretary-General Rilwanu Lukman said: ``OPEC won't wait until November if prices get out of hand again.'' Analysts are not so sure. ``There's less than a million barrels a day of spare capacity available right now,'' said Ross. ``There are no shock absorbers, if there any significant supply losses the market would run into a capacity wall.'' OPEC's latest deal means it has lifted supply this year by 3.2 million barrels per day, a 14 percent increase, restoring most of the curbs dating back to 1998 when crude slumped briefly below $10 a barrel. dailynews.yahoo.com