OPEC Springs Surprise Oil Output Cut

Reuters ^ | 2/10/04 | By Peg Mackey and Mona Megalli

[CFW]

ALGIERS (Reuters) - OPEC (News - Websites) on Tuesday agreed a surprise cut in output limits from April, sending world oil prices up sharply. The deal slices production limits for the group that controls half the world's oil trade to 23.5 million barrels a day from April 1.

Ministers said the Organization of the Petroleum Exporting Countries would also immediately eliminate 1.5 million barrels a day of leakage being pumped above existing supply quotas.

Oil prices rose on the pact, a repeat of last September's unexpected supply reduction.

U.S. crude at 1530 GMT was up 66 cents at $33.49 a barrel, valuing OPEC's reference basket well above the group's preferred $22-$28 target range.

"It's a clever move by OPEC, giving the market some support before the second quarter," said Oystein Berentsen, head of crude trade at Norway's Statoil.

"But given how much they are leaking people will want to see how much of the cut they implement. There's a question mark over their credibility."

The deal is designed to help defend oil prices as demand slackens and world oil inventories build after the northern hemisphere winter.

"The inventory, where it is now, is fine, we don't want to see it building," said Saudi Oil Minister Ali al-Naimi. "We don't want to see a precipitous fall in prices."

For consumer nations the deal looks like a threat to world economic recovery and a reminder that OPEC appears prepared to defend prices that are above its official $22-$28 target range.

A spokesman for the White House said: "It is our hope that producers do not take actions that undermine the American economy ... and American consumers."

"It's a big call," said Kevin Norrish of Barclays Capital in London. "Our own view is that OPEC does not need to cut by as much as it appears to be aiming at."

Saudi's Naimi said projections for a heavier-than-normal seasonal second quarter fall in demand could not be ignored.

Forecasts, including those of the West's energy watchdog the International Energy Agency, are for second quarter demand to undercut world supply by as much as four million barrels a day, more than double the normal seasonal gap.

Saudi Arabia's insistence that it wants $25 for OPEC's crude will be put to the test as it decides export flows for the spring.

Riyadh appeared to have softened its tone on oil price policy since OPEC last met in December. Naimi said at the time that higher prices were justified by the impact of the weak dollar on producers' spending power.

Since then, and again in Algiers, he has made a point of re-emphasizing Riyadh's commitment to OPEC's central $25 target.

[Semper Paratus]

Time to pick up the pace in getting Iraqi crude pumping again.

[dware]

The bastards. Gas is still high in my area as it is! When are we going to just hit ANWAR?

[xrp]

Thanks a lot jerks!

[Clint Williams]

A spokesman for the White House said: "It is our hope that producers do not take actions that undermine the American economy ... and American consumers."

And Bush's need for a good economy in order to be re-elected.

[pfflier]

Agree. I think that OPEC thinks that they can affect our economy therefore the outcome of the elections.

I'm pretty sure they would rather deal with Kerry rather than President Bush.

[newgeezer]

Around here, expect the price at the pump to jump 10 cents by the end of the day on this news alone.

Which means you'll be happy.

By the way, I trust you're doing your part, and filling up your tanks every time the price jumps.

[RedWhiteBlue]

Time to drill in ANWAR.

[ZOOKER]

Gee, you don't suppose the Arabs are trying to influence the US economy as we move into a Presidential election, do ya?

[biblewonk]

Around here, expect the price at the pump to jump 10 cents by the end of the day on this news alone. Which means you'll be happy. By the way, I trust you're doing your part, and filling up your tanks every time the price jumps.

I oil my bike chain and get excited about biking.

[mewzilla]

Just another reason why I'm glad I drive a compact.

[Slings and Arrows]

If we ask the Israelis nicely, do you think they'd annex Saudi Arabia?

[Ff--150]

Coincidently this happens while the G7(8) are meeting?

[ZULU]

"It's a clever move by OPEC, giving the market some support before the second quarter," said Oystein Berentsen, head of crude trade at Norway's Statoil. "

Oy Vey Oystein, how stupid can you get?

Once more our Friends, the Saudis are sticking it to us. WHY? They KNOW they would be much better off with that idiot putz Kerry in Washington than a real man like George Bush.

Consequently, what better way to assist Kerry than to damage the American and wolrd economy on Bush's watch?

If they do this, we should make sure the difference is made up in Iraqi oil.

[Made In The USA]

Someday when technology effects it, OPEC's well will have run dry. Then they can become irrelevant and useless.

Since it's some years off, I've got three gas engines to feed. We should be drilling in ANWR, and getting repaid in oil from Iraq for having freed them from Saddam.

We should also leverage our obvious strength in the region to ensure that the OPEC ministers understand that we will not be taken advantage of on any level.

[CFW]

It is ridiculous for us to be so dependent on foreign oil and OPEC when we could be drilling in Alaska.

[RightWhale]

Oil prices rose on the pact

52 cents a barrel. Fairbanks doesn't care about ANWR. ANWR is insignificant. Fairbanks cares about North Slope natural gas. Chicago cares about North Slope natural gas. People around here are already adding up the tonnage of pipe that will be trucked in for this $50 billion project.

[spacewarp]

Bush should go to the folks at OPEC and let them know if they don't drop the price to $18/barrel, that he will not only order drilling exploration to begin in ANWAR, but he will have the explorers and equipment air-lifted there to begin production in a six to twelve month time window.

Then they would do something about it. Also, he should start with ordering production to be ramped up in the Gulf and off-shore from NC and Florida and CA. As well, we should put some money into investments to drilling in Mexico, where apparently, there are rather large reserves as well. We should be able to beat these bastards and let them eat some sand.

Paul

[the Real fifi]

Still priced in dollars after that monthly reporting they are switching to euros,no?

[lchoro]

Given the decline in the dollar, $ 33 oil is roughly the $ 25 oil of two years ago.

[Former Proud Canadian]

If you are not a US customer you are correct. However, to US consumers $33/barrel is $33/barrel.

[drypowder]

It appears that the oil producing Arab nations are now using high oil prices as a means of retaliation against the US et. al. for their successes in the war on Islamic terrorism. It's now time to turn the table on OPEC. The US should immediately maximise the flow of Iraqi oil into the world market.

[joesnuffy]

We should be drilling in Venezuela ..right through Chavez's haid...

[Glenn]

This helps out George's oil buddies in Texas and elsewhere! They get an immediate boost in price on their inventories and those who do exploration and drilling have a reason to go looking for more oil!

Eureka! I've found a conspiracy between the White House and the Arabs!

Someone call Kerry and let him know what the new talking points will be for this evening.

[bk1000]

drill ANWAR, screw OPEC

[smartypants]

How about looking into other promising forms of energy for the future such as hydrogen? The major oil co's could get on board. We might be looking at 10-25 years (by some estimates) before gasoline could be totally supplanted by hydrogen-driven technologies. Great for the environment, great for producing new jobs, and great for an end to reliance on OPEC (sic, Arab) oil dependency.

[RedWhiteBlue]

I agree.

[RightWhale]

Arab oil is far cheaper than ANWR oil. There's a lot more Arab oil, too, 100x as much.

[TexasRepublic]

"The inventory, where it is now, is fine, we don't want to see it building," said Saudi Oil Ministe

Ah, our good "friends", the Saudis. We should be more attentive to our good "friends".

[kaktuskid]

Do you support nuclear power (needed for producing large quantities of hydrogen)

[kaktuskid]

There is one way to nail these turkeys...Venenzuela (through CITGO) and the Saudis (partners with Shell oil on the East Coat) have major operations here (refineries and gas stations)...Bring their sorry asses into court on ANTI-TRUST laws and sue the hell out of them!!!!! Does not this country have laws against cartels?

[tortoise]

How about looking into other promising forms of energy for the future such as hydrogen? The major oil co's could get on board.

Umm... Where do you think hydrogen comes from? It is manufactured by reforming "fossil" fuels.

Also, the hydrogen fuel cell companies are the major oil companies. Big Oil is actually Big Energy. They don't care what you use, as they mostly own the so-called alternative energy companies. Solar, wind, hydrogen fuel-cell -- its all owned by the oil companies. They'll sell whatever people will buy.

[RightWhale]

Where do you think hydrogen comes from?

Hydrogen is the first atom the universe created, and it is the most abundant element in the universe. Hydrogen existed even before Dubya called for its use in automobiles.

[Dog Gone]

Bring their sorry asses into court on ANTI-TRUST laws and sue the hell out of them!!!!! Does not this country have laws against cartels?

All producers made adjustments to their production when the markets shift. General Motors could flood the world market with Corvettes if they chose to. Farmers could flood the world with watermelons.

Instead they try to anticipate demand and plan accordingly. We get mad when OPEC does it, but in reality, everyone does it. You just don't hear about it.

[bk1000]

"Arab oil is far cheaper than ANWR oil. There's a lot more Arab oil, too, 100x as much."

Relevant points, but, 'cheaper' could be relative. Deduct the costs associated with grovelling to OPEC. As far as quantity goes, is there enough in ANWAR for us? If so, who cares if the Arabs have 1000x as much? Not like they have any need for it, other than to sell it to us.

[RightWhale]

If the cost of oil includes the cost of providing security to the Middle East, then we are paying a lot more than $2 per gallon. Is there enough oil in ANWR to meet our own needs? No, there is enough to pump for a while, but after a year of replacing Middle East oil it would be pumped dry. ANWR is not the answer although we might as well produce the ANWR oil anyway while we still have the TransAlaska Pipeline facilities and personnel in operation rather than try an expensive restart later.

[kaktuskid]

Hydrogen is the first atom the universe created, and it is the most abundant element in the universe. Hydrogen existed even before Dubya called for its use in automobiles.


LIQUIFIED hydrogen is not...it is the only hydrogen usable as a fuel and it has to be produced either by fossil fuels or nuke power..hudrogen floating in the air is worthless as fuel.