Opec expresses concern about rising oil prices
VIENNA, Austria (AP) - Seeking to cool market sentiment, the head of Opec on Sunday said the organisation is concerned about stubbornly high prices that defy what he described as a well-supplied market and adequate crude stocks worldwide.
The statement by Sheik Ahmad Fahad Al Ahmad Al Sabah, Opec's president and secretary-general, was issued in a clear attempt to dampen speculative buying that last week briefly drove prices above US$55 a barrel before they settled in the still historically high lower US$50s.
More bullish oil was poured on the fire on Saturday, when Venezuelan President Hugo Chavez said Opec countries could fix a price for crude in a range of US$40 to US$50 per barrel, adding that low petroleum prices were a thing of the past.
At a crucial Opec meeting in Iran on March 16, some analysts are expecting the cartel to cut production to boost oil prices, which have skyrocketed over the past year on supply worries.
Al Sabah, in contrast, suggested present prices were too high, considering market fundamentals.
"Increased investment in commodities by speculators has caused further sizable upward pressure on prices,'' said the statement, issued by Opec headquarters in the Austrian capital.
Other factors for the surge included the late cold snap in the Northern Hemisphere; unexpected outages downstream at wells and port facilities; expectations of continued strong demand, "and ongoing concerns about the slowdown in the pace of growth'' by non-Opec suppliers, he said.
"Opec is committed to maintaining stability and ensuring that global markets remain well supplied at all times,'' Al Sabah said.
When Opec ministers meet March 16, in Isfahan, Iran, "we shall review the prevailing market outlook to ensure market stability at reasonable price,'' he said, adding that the organisation's present spare capacity - at 2 million barrels a day - will reach a daily 3 million barrels by year's end.
That comment clearly was geared to counter concerns that there was little unused output capacity at a time of generally robust world economic growth.
Crude oil futures traded above US$53 a barrel again on Friday, and analysts said global supply tightness is likely to persist through the year due to economic expansion that so far seems only marginally slower than in 2004.
It was unclear what effect the comments would have on markets Monday.
US Treasury Secretary John Snow, in an interview Sunday with the ABC network's "This Week,'' described present high prices as "attacks on the economy.''
While the American economy has ridden the wave of surging prices, "clearly these energy prices create headwinds,'' he said.
The record close on the New York Mercantile Exchange was set last October at US$55.17 a barrel, although prices would have to surpass US$90 a barrel to meet the inflation-adjusted peak set in 1980.
Because crude sells worldwide for U.S. dollars, and because the currency has lost 8 percent of its value against the euro in the last four months, OPEC nations have signaled support for higher oil prices as a hedge to ensure their buying power in Europe does not fall to much. - AP
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