OPEC Fears Impending Oil Glut
OPEC ministers all but ruled out oil production increases as they gathered in Vienna on Saturday, fretting over the possibility of a glut next year sending prices into a dive.
Their concern about excess production stood in sharp contrast to the worries of consumers worldwide about record-high oil prices triggered by current tight supply.
Leaders of the Asia-Pacific region meeting in Bandar Seri Begawan, Brunei, were set to call on oil producers to meet their concerns by boosting supply, an official there said, not cutting it.
But a report by the International Energy Agency on Thursday forecast that with current OPEC production levels, crude supply would exceed demand by 1.3 million barrels a day by the first quarter of next year.
The Paris-based agency also warned of shortages of fuel products before winter this year, particularly of heating oil.
"We are concerned about what will happen next year," said Qatari oil minister Abdullah al Attiyah, speaking to AFP shortly after his arrival here Friday.
"I believe that we should concentrate on a review of the market and the forecasts for next year," he added.
Many analysts were predicting a supply surplus of more than three million barrels a day by the second quarter of next year, perhaps even earlier, al Attiyah said.
"I believe we should intervene to cut production" using the OPEC price mechanism, said al Attiyah.
The mechanism triggers an output cut if prices persist below 22 dollars a barrel for 10 consecutive working days, or an increase if they remain over 28 dollars for 20 working days.
Brent crude for December delivery fetched 32 dollars a barrel in London at the close on Friday.
The system led OPEC to raise supply by 500,000 barrels at the end of October, following three production increases already agreed to earlier this year. If prices remain where they are, a further rise would be triggered at the end of this month unless ministers decided to override it.
The 11 ministers of the Organization of Petroleum Exporting Countries were to meet officially Sunday, but informal talks were being held in advance at a handful of hotels in central Vienna.
Saudi Arabian Petroleum Minister Ali Naimi, representing the world's biggest producer by far, was to arrive later in the day.
In Brunei, the 21-nation Asia-Pacific Economic Cooperation (APEC) forum's economic committee released a report saying the region was unlikely to face a new inflationary spiral linked to high oil prices, but oil-dependent economies such as South Korea could be hurt.
"Higher oil prices, if sustained, could pose a downside risk on the generally positive outlook of APEC economies through next year," the report warned.
APEC leaders and US President Bill Clinton were to hold a two-day summit from Wednesday in Brunei.
"In the upcoming leaders' summit, they will discuss the oil price issue, and it is possible that leaders and ministers will call for an increase in oil supply," said the APEC economic committee chairman, Mitsuru Taniuchi – VIENNA (AFP)
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