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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: energyplay who wrote (53073)	9/7/2004 11:21:36 AM
From: elmatador	Respond to of 74559

Word of oversupply from OPEC punctures oil prices Reuters News Service LONDON - Oil prices eased further today, as the head of the OPEC cartel said markets were well-supplied with crude and traders continued to take profits from this year's 40 percent rally. London Brent crude fell 20 cents to $40.42 a barrel, following a 61-cent drop Monday. U.S. light crude fell 91 cents to $43.08 a barrel, catching up after being closed on Monday for the long Labor Day weekend. Brent prices now stand nearly five dollars below the $45.15 record high hit last month, as higher production from the Organisation of the Petroleum Exporting Countries is helping to ease concern about tight world supplies. OPEC President Purnomo Yusgiantoro said in Sydney that global markets had an oversupply of about 1.5 million barrels per day of crude oil. Cartel ministers meet on Sept. 15 to set supply policy for the fourth quarter. "If you look at the supply and demand balance, the world has enough oil," Yusgiantoro told reporters at an industry conference in Sydney. "Why is the price so high, it's the political premium." UAE Oil Minister Obaid al-Nasseri, speaking in Abu Dhabi, echoed that sentiment when he said that OPEC would discuss raising its official production limits when it meets next week in Vienna, but had already done all it could to cool oil prices by pumping nearly flat out. He added that formal suspension of output quotas was "not an option." Top world oil exporter, Saudi Arabia, is estimated to have pumped 9.5 million bpd in August, up 250,000 bpd from July. The kingdom, which has pledged to supply customers with all the oil they want to stem this year's price rally, slashed prices for westbound October-loading crude in an effort to entice buyers to take the shipments. "The market certainly looks to be taking a step back and looking at the fundamental picture after a very volatile period over the last couple of months," said Daniel Hynes, industry analyst at ANZ Bank in Melbourne. Many analysts do not expect prices to fall far, as rapid world demand growth and tight spare production capacity magnify the impact of supply disruptions in Iraq. Oil shipments along Iraq's northern pipeline to the Turkish port Ceyhan remained shut on Monday due to a sabotage attack last week. Repairs were expected to take at least a week. A threat to U.S. oil production in the Gulf of Mexico faded after Hurricane Frances fizzled out and Royal Dutch/Shell restored shut-in production. But another storm, Hurricane Ivan, was headed across the Atlantic towards Barbados and the eastern islands in the Caribbean. Non-essential oil workers were evacuated from some oil and gas rigs off Trinidad and Tobago. Demand for gasoline in top world consumer the United States is now passing its summer peak, and traders are switching their focus to consumption of heating fuels, which rises to a seasonal high during the northern hemisphere winter. Last week, the U.S. government said national crude stocks fall to the lowest level in five months, while distillate supplies, which include heating oil, rose two million barrels to stand at a 1.2 million barrel surplus versus a year ago. European supplies of gas oil threaten to tighten as the region's refineries go into extensive maintenance to prepare for new environmental rules on diesel fuel, and German households stock up ahead of winter. European forward stock cover, taking account of increased demand, is the lowest in 10 years according to SG bank.