OPEC countries ministers gathered together in Venice this Thursday. The problem of reducing quotas for oil extraction in the current situation of fluctuating demand is being discussed.
OPEC directors annulated invitations previously sent to Russia, Oman, Mexico, Egypt and Syria to join this conference.
A high rank source in OPEC Venice headquarters claims that the reason behind this was “low interest from the observing countries for the conference and also their slowdown in delegation members appointment”
Participants of this conference will discuss quotes on extracting and exporting of raw oil. The current OPEC head Alvaro Silva will end his term on the 31st of December.
Oil ministers of OPEC countries voiced support for high oil prices, which are in accord with lowering of the American dollar (the oil market’s currency). “Current prices are just”, said Saudi Oil Minister Ali al-Naimi. The latest OPEC data shows that the price of “oil basket” of seven oil types was USD28.43 for barrel this Tuesday. In the last two months the price of this basket has been almost always above the upper limit of the declared $22-28 diapason set by OPEC itself. “The fact that dollar is lower now justifies the current prices, even if they exceed the upper limits set”, commented Libyan delegation head Abdulhafidh Zlitni. But both al-Naimi and Zlitni stood against widening of the price diapason.
At the same time, answering the journalists’ questions, al-Naimi did not exclude possibility of quotas reduction at the conference, despite many conference members said they do not expect this. Al-Naimi said this: “Nothing can be excluded until the conference is over. There is some concern with the second quarter of the coming year, and some preventive measures ahs to be taken now or at the next scheduled meeting in march”
Algerian oil Minister Chackib Khelil also commented on the 2004 second quarter: “In the second quarter of 2004 a great pressure will be imposed on the oil prices. Demand will reduce by 2.5mln barrels a day. Extraction volumes of independent producers will grow, extraction in Iraq grows. In the first quarter the pressure will not be as much, since demand is going to be okay”.
Meanwhile, price of January futures contract for WTI type oil at NYMEX rose up to $31.25 per barrel this Thursday (a $0.15 increase).
Prices go high in expectations of quotas reduction in the second quarter of 2004. Oil ministers of Saudi Arabia, Libya, Venezuela, Algiers and UAE at their meeting before the conference expressed concerns with growing oil extraction in the next year, and also with lowering of American dollar, which decreases real profits of the exporters of oil. Market participators expect revision of the set quotas to their shrinking in January-February of 2004 year.
Another reason for price increase is fall of oil stocks in the US. According to the States’ Energetic Ministry, in the week finished on the 28th of November, the stocks were 4.8mln barrels lower than before, amounting to 284.3mln barrels.
At the International oil exchange (IPE, London) price of January futures for Brent type oil rose by $0.20 to $29.14 a barrel. The same oil at NYMEX was $0.16 higher, $29.12 a barrel.
Russian oil Urals (CIF Mediterranean ports) on Wednesday was $27.96 a barrel what is $0.16 lower than spot prices on the 2nd of December.
Export oil from Russia CIF North-West Europe was $27.66 a barrel (-$0.06), Siberian Light on the same conditions was $29.21 a barrel (-$0.16), informs Interfax.