Indonesian Energy and Mines Minister Purnomo Yusgiantoro said on March 7th that he would call on OPEC to curb output levels for the second time this year to avoid falling oil prices in the second quarter.
Yusgiantoro said that: “I am going to ask OPEC to cut production because currently there is oversupply.
In the second quarter, the oil price might be below $20 [a barrel] if OPEC does not cut production.” He declined to name a figure for the proposed cut, but said that: “It depends on the situation because the current market conditions are changing.”
The minister had suggested in early February that the cartel cut production by 1.5-2 million b/d at its upcoming meeting in Vienna on March 16th.
A senior Saudi source had said on March 6th that OPEC ministers were expected to agree to a production cut at the next meeting.
The source said that: “The possibility of cutting production is very, very high. We want to maintain $25 a barrel.”
OPEC Secretary General Ali Rodriguez had also said on March 5th that there was a consensus among cartel members to take action if prices drop sharply.
Rodriguez said that: “If there are sharp falls in prices, we will apply corrective measures.” He stressed that any output cuts would depend on demand forecasts for the second quarter.
“We still haven’t arrived at a consistent determination of what demand will be like,” he said. The former Venezuelan oil minister also pointed to rising stock levels.
He said that: “Inventories, as we have said, aren’t as low as has been suggested. No, there is no great shortage of supply, oil supply is sufficient.”
© 2001 Mena Report (www.menareport.com)