OPEC Ministers Continue Spin As Prices Rocket
Crude prices soared to new Gulf-war highs in overnight trading on September 20th, on fears of a renewed conflict in the Gulf and reports of continuing low U.S. inventories.
OPEC ministers attempted to reassure markets that the group would act again to raise output, if prices continued to stay above the desired $22-$28 a barrel price band for the OPEC basket of crudes.
Algerian Energy Minister Chakib Khelil said on September 20th that OPEC members may decide at the heads of state summit in Caracas on September 27th and 28th to increase production.
"The 20-day deadline of [the] price mechanism will coincide with the OPEC summit ... If prices remain at the current level until end-September we will decide to pump an additional supply of 500,000 b/d," he told reporters.
OPEC officials indicated, though, that OPEC’s September 10th agreement to increase output will not take effect until October 1st and that the 20-day working period would not begin until then.
OPEC Secretary General Rilwanu Lukman reiterated that OPEC has done everything it could to reduce prices, saying that: "That (high oil price) is because there are factors at work in the market, factors that are being conveniently ignored by certain parties who are failing to take their share of responsibility."
Lukman's statement followed OPEC President and Venezuelan Oil Minister Ali Rodriguez's comment on September 19th that futures market speculation "is adding $8 per barrel on top of the real price that a barrel should be worth based on supply and demand."
The latest remarks from OPEC officials came after markets shot up to $37.80 near opening on Wednesday, with this week's American Petroleum Institute’s (API) statistics showing a 2-million-barrel draw in crude stocks in the week ending September 15th and only a modest build in heating oil, leaving inventories 24 percentlower than last year.
( oilnavigator )
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