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Oil prices slip, a
little
By Humberto Marquez
CARACAS - Crude oil prices have been
dropping in recent days in reaction to reports of
higher inventories in the United States, the
world's largest consumer, but they have still not
dipped below the $50-a-barrel mark that was
crossed in February.
Moreover, long-term
prospects point to sustained high prices due to
growing demand from China. In New York, the price
of West Texas Intermediate (WTI) light, sweet
crude had fallen to $54.11 a barrel on Friday
after reaching a record high of $58.28 on Monday.
In London, the price of Brent North Sea crude -
the European benchmark - dipped to $53.20 a
barrel, down from $56.35 at the start of the week.
The weekly averages were $56.02 a barrel
for WTI, $55.45 for Brent North Sea crude, $47.37
for Venezuelan crude, and $51.98 for the
Organization of Petroleum Exporting Countries
(OPEC) basket of seven crudes, reported the
Venezuelan Ministry of Energy. When the WTI price
climbed above $58, US Treasury Secretary John Snow
expressed alarm. "We're not an economy geared to
$60 oil," he said.
For its part, OPEC
announced that it could boost output to help keep
oil prices in check. The organization, made up of
Algeria, Indonesia, Iran, Iraq, Kuwait, Libya,
Nigeria, Qatar, Saudi Arabia, the United Arab
Emirates and Venezuela, currently produces 29.9
million barrels of oil daily, which represents 36%
of global demand. Ten of the OPEC countries - all
of the members except Iraq, which pumps around 2
million barrels a day - have adopted quotas and
gear their production caps to market activity. In
March they agreed to an increase of 500,000
barrels a day, though according to experts extra
production has only reached 238,000 barrels so
far.
"OPEC is reaching its production
limit," warned Venezuelan Energy Minister Rafael
Ramirez, pointing to estimates that indicate the
organization can't extract more than 31 million
barrels a day. For his part, Indonesian Energy
Minister Purnomo Yusgiantoro said his country is
already producing at 95% of its capacity.
Nevertheless, Kuwaiti Energy Minister and OPEC
president Ahmed al-Sabah reported that discussions
had begun regarding a possible half-million-barrel
daily increase in output, although he added that
"we have to wait to see exactly how" prices behave
in the next two weeks.
Crude oil
inventories in the US rose 2.4 million barrels to
317 million barrels in late March, a level last
seen in July 2002. But while that is high above
270 million barrels - the so-called operating
minimum, equivalent to 15 days of consumption - it
is not sufficient to calm the jitters of a market
exposed to unforeseen contingencies while global
demand continues to grow unabated.
According to the International Energy
Agency (IEA), which comprises the industrialized
member countries of the Organization for Economic
Cooperation and Development (OECD), this year's
worldwide oil consumption will rise to 84.3
million barrels a day from last year's figure of
82.4 barrels. International Monetary Fund (IMF)
chief economist Raghuram Rajan last week said,
"The oil market will remain tight in the coming
years, and high and volatile oil prices will
continue to present a serious risk to the global
economy. To the extent that there is some kind of
a supply disruption, $100 a barrel does not seem
outlandish," but noted that it was not "the most
likely scenario".
IMF estimates point to a
worldwide oil demand of 140 million barrels a day
in the year 2030 (even higher than the 120 million
barrels predicted by an IEA study last year),
while the Association for the Study of Peak Oil
and Gas maintains that the planet cannot produce
much more than 100 million barrels a day. A large
part of the increased global demand will come from
China. While there are currently around 22 or 23
million motor vehicles on the road in the Asian
giant, or roughly 16 per 1,000 population, the
ratio is predicted to rise to 270 per 1,000
inhabitants by 2030, for a total of 390 million
vehicles. China will then account for one quarter
of the world's oil consumption - the same
proportion currently represented by the US.
(Inter Press
Service) |
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