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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Tomas who wrote (25852)	9/22/2003 5:30:23 PM
From: quehubo	Respond to of 206325

BIRD ON OPEC: In Growing Stocks, Reflection Of '97 Crash By DAVID BIRD Of DOW JONES NEWSWIRES VIENNA -- It's no wonder OPEC ministers are nervous about the 600,000 barrel-a-day rise in global oil stockpiles predicted for the fourth quarter. The last time inventories rose by that much in what is the strongest season for oil demand, crude oil prices were only half what they are today. As reported, the Organization of Petroleum Exporting Countries is projecting global stocks will rise in the first part of winter in the Northern Hemisphere, compared with the more typical decline of around 1 million barrels a day in the fourth quarter of 2002. The last time fourth-quarter stocks rose by that level was 1997, when a warm winter, the Asian economic crisis and a rise in OPEC output sent prices into a prolonged tailspin, falling below $10 and not fully recovering for two years. OPEC is widely expected to keep oil output levels unchanged when it meets Wednesday. Ministers say they're comfortable about the near-term outlook, even though the price of OPEC's reference basket of crudes is down 10% from when the group last met two months ago, to just below $25. The group is also expected to set further talks for early December. The outlook then won't be so comfortable. OPEC's expert staff are warning ministers that along with the uncertain outlook on Iraq's recovering oil output and a continued surge in non-OPEC supplies, the growth spurt in worldwide inventories is further cause for concern. Big Build Start In 2Q The International Energy Agency has said inventories remain too low despite recent growth. But OPEC dismisses those concerns, saying European and Asian levels are normal and U.S. inventories are recovering. While the focus is on the fourth quarter, the root of OPEC's problem goes further back. OPEC data show global stocks rose by 1.94 million barrels a day in the second quarter, more than twice the rate of the same period in 2002. In the current quarter, OPEC expects stocks will grow by 1.5 million barrels a day, compared with a decline of nearly 1 million barrels a day in the third quarter of 2002. When the stockbuilds or projected stockbuilds of the second, third and fourth quarters are put together, they average out to 1.35 million barrels a day, compared with a drop of about 350,000 barrels a day last year. OPEC says the forecasts make assumptions about several variables that could skew the ultimate result. The group is assuming a winter weather is "normal," and also that the group's members other than Iraq keep their output close to the 25.4 million barrel-a-day ceiling for the remainder of the year. One Last Blast? That's where things can get tricky. In July and August, OPEC pumped an average of 25.7 million barrels a day, not counting Iraq. But faced with a near certain need for a steep cut in quotas in the second quarter - when OPEC expects demand to fall 2 million barrels a day, or 7.6%, from winter levels - members may be inspired to pump more now while they can. Iraq is a wild card in the deck, but if the country manages to sustain its current claimed output of 1.8 million barrels a day, the fourth-quarter stockbuild could be even larger. OPEC knows the outlook for 2004 shows unbridled output rises from Russia and other independent producers will outstrip growth in oil demand. The inevitable further loss of market share by the group next year is a concern just below the surface here. The group says it's committed to act to avoid a repeat of the price collapse of 1997 when the time is right. A Gulf delegate says OPEC - mainly Saudi Arabia - won't begin pressing Russia and others now to help the group make supply cuts. "It's too soon," the delegate says. "Right now the price is all right, the market is good...so we wait." And while the group waits, the weight of those extra barrels heading to global storage grows on the market. -By David Bird, Dow Jones Newswires; david.bird@dowjones.com (David Bird is senior energy correspondent for Dow Jones Newswires) URL for this article: online.wsj.com