OPEC: Supply isn't reason for high prices.

Discussion in 'In the News' started by xcel, Apr 23, 2006.

  1. xcel

    xcel PZEV, there's nothing like it :) Staff Member

    Stockpiles reach highest levels in 30 years.

    CNN/Money - April 22, 2006


    WASHINGTON (Reuters) - OPEC oil-producing nations said Saturday oil prices have risen despite a well-supplied market, adding it was urgent to identify new indicators of price trends to supplant the now-unreliable gauge of oil stocks.

    "This price rise occurred despite the fact that the market continues to be well-supplied," Adnan Shihab-Eldin, acting secretary-general of the Organization of Petroleum Exporting Countries, told a meeting of the International Monetary Fund's policy committee.

    "The healthy situation on the supply side is further demonstrated by OECD crude oil inventories, which are at comfortable levels both in absolute terms and in days of forward cover, while U.S. commercial crude oil stock levels have reached their highest levels in eight years," he added, referring to the 30-nation Organization for Economic Cooperation and Development.

    Oil prices leapt to a new peak over $75 a barrel on Friday amid persistent worries a showdown over Iran's nuclear program could wind up disrupting supplies.

    Finance officials from the Group of Seven rich nations on Friday pointed at oil prices as a potential stumbling block for the global economy and called for increased production and investment.

    Shihab-Eldin said uncertainties over the future demand for oil were complicating investment decisions and "consequently increasing the risks associated with both under- and over- investment." He said the need for "appropriate investment" extended to the entire supply-chain.

    Shihab-Eldin drew a distinction between the ample supplies on the crude side and tight supplies of refined products.

    "The picture on the products side remains tight, given the persistently low levels of refinery spare capacity and more stringent products specifications" in the United States, he said.

    "As a result, any shortage caused by technical or logistic problems will continue to have a significant impact on the global market, affecting products prices and, consequently, crude oil prices," he added.

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