Venezuelan Oil Minister Alvaro Silva and Indonesian Energy and Mines Minister Purnomo Yusgiantoro said on March 13th that OPEC would likely cut production at the group’s upcoming March 16th meeting in Vienna by as much as 1 million b/d.
When asked whether the cut would fall in the range of 500,000 to 1 million b/d, Silva said that: “That might well be the right range, but we will decide at the conference the final level of the cut.”
He added that: “We need to consider supply and demand. Our ultimate aim is to stabilize the market.” Yusgiantoro indicated that Indonesia would also voice support for a production cut. He said that: “There is a surplus of between 500,000 to 1 million b/d of oil.
Indonesia will propose cuts of that amount to strengthen oil prices.” Following a meeting with Mexican Oil Minister Ernesto Martens and Saudi Oil Minister Ali Naimi on March 12th, Silva declined to say whether Mexico would cut production in conjunction with OPEC as it has done in the past, but reiterated the trio’s promise to work together to maintain market stability.
The executive director of the Paris-based International Energy Agency, Robert Priddle, said on March 12th that OPEC should consider low stock levels, in addition to demand levels, when making output decisions.
He said that: “I’d like OPEC to look very carefully … not only at the shifting expectations of demand, but also on the supply side.” Priddle added that: “Of course there are signs of weakening demand in the world that will enhance OPEC’s anxiety about production and overproduction.
On the other hand, stocks in the world remain extremely low and it was the low level of stocks last year -- rather than any shortfall in coverage of actual demand -- that led to the fluctuations in prices.”
He pointed to the American Petroleum Institute’s report last week that U.S. crude inventories had fallen to 25-year lows, cautioning that stocks needed to rebuild during the second quarter.
© 2001 Mena Report (www.menareport.com)